Majority back proposed COE ‘feebate’ scheme, most favour five-band system

To continue distinguishing between mass-market and higher-value cars, LTA proposed introducing a feebate system based on a car model’s open market value (OMV).

A car in a lower-value band would receive a rebate on its COE price, while higher-value models would face a surcharge. Depending on how the bands are structured, the difference between the highest surcharge and largest rebate could be as much as S$30,000.

LTA has proposed either a three-band or five-band system, with the largest rebate and surcharge set at S$15,000 in both options.

The agency said the aim is to better distinguish between mass-market and higher-value cars while allowing COE premiums themselves to continue to be determined by market forces.

LTA has said it expects to complete its review by the end of the year and publish its findings and recommendations in the first half of 2027.

FIVE BANDS PREFERRED

MP Edward Chia Bing Hui (PAP-Holland-Bukit Timah), who had earlier proposed the feebate system, asked whether the rebate and surcharge could be set as a percentage of the COE price instead of as fixed amounts.

Mr Siow said this could reduce the “cliff effects” between bands further, but would also mean buyers would not know the exact rebate or surcharge before the COE bidding exercise begins.

LTA will also study whether to further reduce COE bidding fees for individuals and whether motor dealers should be required to publish car prices without COE.

Some buyers still prefer dealers to bid for COEs on their behalf as a one-stop service, Mr Siow said, adding that the government should not make this more difficult.

“But we can make it easier for individual buyers to bid for COEs on their own,” he said.

LTA is also still reviewing how taxis would be treated under the proposed feebate system, Mr Siow said.

EV SUPPORT TO REMAIN SEPARATE

MP Choo Pei Ling (PAP-Chua Chu Kang) asked how the proposed system would avoid discouraging the adoption of high-performance EVs, which can have higher OMVs, and ensure mass-market buyers were not crowded out by luxury car buyers.

Mr Siow said a separate feebate structure for EVs had been proposed, but this would make the system too complicated.

The government will instead continue to support EV adoption separately through the Vehicle Emissions Scheme rather than through COE policies, he said.

SUPPORT FOR FAMILIES

MP Tin Pei Ling (PAP-MacPherson) asked whether the proposed feebate could increase demand for lower-value vehicles and inadvertently push up prices of mass-market cars.

She also asked what more could be done to help large families that need a car.

Mr Siow said he recognised that larger families, particularly those with young children, may find it difficult to travel together on public transport.

But any support would also have to consider families that do not intend to buy a car and instead rely on public transport, taxis, private-hire cars or car-sharing services, he said.

The government is studying the option of a transport grant, with more details to be provided later.