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Levying high taxes on new cars

india Updated: May 08, 2013 00:31 IST
Hindustan Times
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Hong Kong
Hong Kong relies on registration taxes and licence fees to curb car growth. All imported cars must be registered and subject to a first registration tax between 40 and 115% of the car's value. Only cars holding an annual licence - issued for a fee of between HK$3,900 and HK$13,300, - are allowed on roads.

Singapore was the first country to restrict vehicle ownership through its unique Vehicle Quota System (VQS). Its Land Transport Authority realised that unless the cost of car ownership is raised, their number will remain high.

In the new system, prospective car owners are required to purchase a Certificate of Entitlement (COE), which is a licence that lasts for 10 years. The government sets a quota on COEs for different vehicle categories a year in advance. COE allocation is done through open auction.

There are two COE open bidding exercises every month. The quota for a particular year depends on the net allowed increase of 3% and number of vehicles to be de-registered that year.

Singapore's annual vehicle growth is less than 0.5% and the premium for owning a compact car is HK$300,000.

(Source: Singapore Manages Traffic Congestion through its Vehicle Quota System by Josephine V. Yam)