With the theme Emerging Stronger Together, one of Budget 2021’s focus is on implementing measures to accelerate structural adaptations for the long run which includes a rise in petrol rates.

Budget 2021 Announces a Hike in Petrol Duty Rates

On 16 February 2021, Deputy Prime Minister Heng Swee Keat announced an immediate increase of 15 cents per litre for premium petrol duty rates. Meanwhile, intermediate petrol saw an increment of 10 cents per litre.

The last petrol price hike had been in 2015 and it had shown how usage-based tax had shaped a better consumer behaviour where fuel is used more efficiently. Moreover, consumers have even sought out environmentally-friendly alternatives such as opting for public transport which is in line with this year’s theme.

Petrol Companies Will Not Absorb the Price Increase

Petrol companies are not taking this opportunity to absorb the tax hike and use the price difference to gain market share but are instead looking into enhancing brand loyalty.

Vehicle owners can expect to see more discounts and promotions from petrol companies in their efforts at maintaining long-term market share stability.

Some are Already Feeling the Pinch

As much as vehicle owners understand and feel for the green movement, the sudden and immediate price hike still came as a shock to many. Full-time delivery and ride hiring drivers have mentioned how the increased petrol rate will require them to fork out an extra S$60 to S$100 each month moving forward which was a main cause of concern.

Despite being impacted by the raise, the effect on all riders and drivers are varied. To help soothe the concerns, the government will be rolling out road tax rebates to help vehicle owners ease in the transition.

More Road Tax Rebates

Motorcycles will receive a one-year road tax rebate of 60 per cent. Depending on the engine capacities of their vehicles, owners of smaller motorcycles will end up with S$50 or S$80 more in pocket.

On top of a one-year 15 per cent road tax rebate, all taxis and private hire cars using petrol will be given petrol duty rebates of S$360 over a period of four months.

All road tax rebates will be taking effect from 1 August 2021 and are expected to cover about one year worth of petrol duty increase for motorcycles and taxis.

Additional petrol duty rebates for motorcycles, taxis and private hire cars will be introduced by mid-2021.

How are Service Providers Looking to Help their Drivers?

Other than road tax rebates, ride-hailing and delivery providers will monitor the situation and offer help to their drivers wherever fit.

Here are some updates in statements released by providers:

• Grab is engaging all stakeholders to discuss the impact on their drivers and delivery partners.
• Deliveroo is negotiating the best deals with petrol companies for their 9,000 riders.
• Foodpanda has an existing partnership with Esso to provide fuel discounts to their riders and will further encourage riders into taking up their e-bikes and bicycles incentives.
• Ryde plans to keep its commission rate at 10 per cent but might adjust incentives for its drivers, or increase the base rate from the second quarter onwards.

More than Revenue, the Increment is for Emission Reduction

Consumer behaviour is a key factor in addressing climate change. If sustainability is not maintained, every other environmental benefit from investments in new green technologies and progressive green policies will not see its full potential.

“We must lock in these behavioural shifts. A car-lite society will continue to be our main goal. Public transport is, after all, the cleanest and most energy-efficient mode of transport,” said Mr Heng.

Behavioural changes require time and Singaporeans will need more nudges to reduce emissions on the roads.

“Building a green Singapore will require a whole-of-society effort, and I hope that we can harness the ideas and energies of the public, private and people sectors,” added Mr Heng.

“Together, we can build a sustainable home for all.”

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