It’s one thing to mind your Ps and Qs, but what on earth is a PQP? Don’t fret if you have no idea. Here’s a handy guide to the terms that a car buyer will encounter in acronym-mad Singapore
SINGAPORE — What can be just as dizzying as demolishing a tray of vodka slammers (but nowhere near as damaging to your health)? The process of buying a car in Singapore is a good candidate.
The final price you pay for a car here can be a dauntingly large number, but there are concrete reasons for that which have to do with how the total sum has to be divided amongst a number of parties.
But the main principle behind vehicle taxes here is that road space is limited and the car population should be managed accordingly. There are other things at play: the need to be socially fair, the need to nudge drivers towards cleaner cars, and so on.
That’s where various taxes and schemes come into play, each with their acronyms. To make sense of it all, here’s how to decode the ABCs of car-buying, Singapore-style:
LTA – Land Transport Authority
You know the Saman Auntie? Well, the LTA pays her salary. And guess who pays the LTA? That’s right, you do. This stat board collects vehicle taxes, including the majority of what you pay for a new car including the ARF, COE and road taxes. It oversees the transport infrastructure and basically has to make sure you have a smooth journey, whether you take a train, bus, cab, or drive.
Interestingly, the money collected by the LTA isn’t ring-fenced, but goes into a common pool for the Government to spend. That COE you paid for might well have gone into the Park Connector near your flat.
“LTA” are also the letters you’ll most likely see if you’ve been caught parking illegally or driving along the bus lane — that sounds evil, but it makes sense in the context of keeping transport flowing smoothly.
OMV – Open Market Value
Buy a car, pay taxes. How much taxes? Look at the OMV. In simple terms, the OMV is how much a car distributor paid the factory for your shiny new wheels, plus the cost of shipping it over, and the cost of insuring it against a transit mishap or the odd kraken.
It’s assessed by Singapore Customs and gives you some idea of how much your car would have cost in another country. To which your inevitable reaction is:
ARF – Additional Registration Fee
Nothing is certain except for death, taxes, and the Additional Registration Fee, which is a levy you’ll have to pay when buying a new car. The higher the OMV of the vehicle, the more cash you’ll have to fork out.
For cars with an OMV of up to $20,000, the ARF value will be 100 percent of the OMV. For any amount between $20,000 and $50,000, you pay 140 percent, and anything above $50,000 demands a hefty 180 percent.
“Registration Fee” sounds so innocuous, but the sums involved can be the stuff of heart attacks. But a component of social equity has obviously been built into the scheme: buy a luxury car with a high OMV, and you pay more in ARF than someone who chooses a humbler offering.
COE – Certificate of Entitlement
Theoretically you could buy a car without COE, but you’d be paying for a very nice sculpture. That’s because a COE lets you drive your car (and only then, for 10 years) so you need one if you intend to turn that sculpture into useful transport. After 10 years you will have to decide whether you want to renew the COE (see PQP) or buy a new car with a new COE.
Contrary to popular belief, the term “COE” has nothing to do with the Hokkien “see hor ee” (“die for them”). At least, we don’t think it does.
And it’s wrong to think of a COE as an expensive piece of paper. They’ve gone paperless now.
COEs are generally reviled, but they’re a direct means of population control: the more COEs are issued, the more cars can be sold and vice versa. The irony is that, just as buying a car without a COE would mean that you’d have to keep it at home like a sculpture, if we had no COE system at all you would very likely prefer to leave your car at home anyway, instead of facing hours of congestion.
CEVS – Carbon Emissions-Based Vehicle Scheme
Caring for the environment doesn’t require you to become an environmental activist. If you want to drive without the environmental guilt, this scheme will not only encourage, but enable you to take $5,000 to $30,000 off the Additional Registration Fee (see ARF). The cleanest cars, like Toyota’s Prius C, emit so little carbon that they qualify for the full CEVS rebate.
On the flipside, cars with high carbon emissions equal to or more than 186 CO2/km will have penalties worth $5,000 to $30,000 added to their price tag.
PARF – Preferential Additional Registration fee
Turning 10 means birthday cake for us, but for your car it could mean, well, death. If you de-register and scrap or re-export your car when it reaches the end of its COE decade (or anytime before), you actually get some of the upfront taxes you paid back, as a PARF rebate.
That’s right, you can actually get money back from the LTA.
The earlier you do it, the more cash you receive.
It’s the LTA’s way of keeping the vehicle population young. The idea is that newer cars are less likely to break down and clog up the highways. They also happen to be more fuel-efficient and safer, but those are just side benefits.
PQP – Prevailing Quota Premium
Is your COE kaput? If you decide to keep ol’ faithful for another 10 years, you won’t have to bid for a new COE. Instead, you pay the PQP which is equivalent to the three month COE price average. If you only want to keep your car for five more years, you pay 50 per cent of the PQP. Keep in mind, renewing your car’s COE means you give up any PARF rebate. Sure you wouldn’t rather have a nice, new car instead? After all, now you know everything there is to know about it!
BONUS: ERP – Electronic Road Pricing
Now that you’ve got your car, it’s time to memorise the location of every ERP gantry. Why? Because during certain hours of the day, they vacuum money from a stored-value CashCard that you insert into a beeping grey device. It’s the LTA’s way of charging motorists for using a road and making sure that not every driver is trying to use it at the same time. That would just spoil everyone’s fun.