What do you make of the petrol tax hike?

One of the few downsides to the 2015 budget is the petrol tax hike. With effect from the delivery of the budget speech last week, petrol tax has increased by either 15 cents or 20 cents per litre, depending on the grade. That tantamounts to a 37% or 44% increase in taxes; bringing prices to slightly below record pump prices, all in one fell swoop! Of course the government gave a temporary reprieve of road tax rebate of 20% for only one year, which doesn’t quite come close to assuaging the cost increases.

Let’s look at the numbers.

I pump about 58 litres of 95-octane petrol a week. The increase in tax will now see me paying an additional $8.70 per week. That sums up to $452.40 a year. Ad infinitum! I pay $1786 in road tax a year so the 20% rebate will come up to $357.20. The 20% rebate cannot even make up for the petrol tax increase for one year! This is a major net-gain for the government!

But of course we know why the government has done this, right? The GST takings from petrol consumption have dropped off significantly because of the drop in petrol prices. The easing off of the prices also puts paid on some of the government’s initiatives to discourage people from using their cars. Hence, there is a need to rebalance the system and put more money back into its coffers. Yet, this increase is permanent. While the drop in petrol prices will likely correct itself over the next 6 months, the increase in petrol duties will most certainly stay. Which makes one wonder – if the government is so bent on keeping cars off the road, why are they spending so much money upsizing the PIE, building the MCE and creating more road space? Will our very expensive roads become white elephants in time? Or worse, only benefit the rich?

The government is very strategic and they can see decades into the future and make decisions in the present that will thwart us from reaching the worst-case scenario. In this respect, the government has been successful time and again. However, one also needs to ask if they are doing this at the expense of some people, or some dynamic? Is their efficiency so cut and dry that they can address economic matters but kill social ones? Do they make decisions only for the interest of the dollar value to coffers, but with little regard to social impact? True, none of us wants the roads to be as congested as Jakarta’s; but how we go about doing it is as important as why. And perhaps here, the government may have missed the forest for the trees. Perhaps driving a wedge between the Singaporean and his car may be a sticky point which might come back to haunt the government?

There is one more peculiar outcome to the announcement of the petrol hike – dead silence. No one seems to be speaking about it AT ALL. No chatter in the media, no chatter in cyberspace. It makes one wonder if Singaporeans are all sheep getting ready for shearing; or perhaps they are waiting for a more opportune time to speak out? What do you make of the petrol tax hike?