We have a Certificate of Entitlement (COE) system for owning a car in Singapore. Each COE represents a right to own a car for 10 years; after which, they would have to be renewed. The detail is as shown here.
http://www.lta.gov.sg/content/ltaweb/en/roads-and-motoring/owning-a-vehi...
Recently, the Authority introduced a new element called “engine power” as a tweak to the existing rules governing the bidding of the COE. Besides the original element of engine capacity of up to 1,600 cc for Category A, car having a powerful engines more than 130 bhp will no longer be qualified for bidding under Category A. This latest tweak “kicked out” more powerful cars such as Mercedes and BMW from Category A even though they are less than 1,600 cc.
http://www.straitstimes.com/the-big-story/land-transport-masterplan-2013...
The public was expecting that the recent tweak would help to cap the rising COE prices in Category A. But after 2 months in operation when the public did not notice a fall in COE prices, the Authority came out to say that the recent COE tweak has achieved its goal to retain the car models for the mass-market. Its goal was not to lower the COE prices.
http://www.todayonline.com/singapore/coe-category-tweak-achieved-its-goa...
No one quite knew what the Authority’s original goal was although the mass was of the view that the Authority was trying to cap COE price in Category A when it was rising rapidly.
When one were to analyse the recent tweak, one would find that the tweak did not comply with the fundamentals of controlling the car population nor the usage; instead, it deviated with the intention to regulate the price of Category A. It was “designed” to fail.
The basic economic theory always tells us that the price of a product is often controlled by supply and demand and not by others such as product’s shapes or dimensions.
The recent tweak may have “squeezed out” the branded car to the other categories and what good does it serve? On the other hand, the tweak “punishes” those who wanted to buy more economical and efficient cars.
Earlier days, our forefathers came out with varies categories of taxes tied to the capacity of the cars because cars caused pollution; therefore, petrol cars has lower taxes than diesel cars; smaller cars has lower taxes. They increased the amount of taxes to control the population in the later stage. When that failed, they introduced COE. The original idea of COE was for bigger car to pay higher COE as it has a bigger footprint. For ease of implementation, COE categories are tied to engine capacities instead of the car footprints. That worked pretty well.
Electric Cars
These cars will be taken by storm as they improve their energy storage system. Electric cars could no longer be ruled by engine capacities nor could it be classified properly using engine horse-powers because of its compactness. Electric cars may be able to churn out more powers than ordinary petrol engines. Their physical size will be much smaller because the energy boxes will occupy lesser spaces. There would be a need for the Authorities to reclassify the COE category for the electric cars in the future. It is therefore hope that the Government could introduce new tweak that would comply with the fundamentals of controlling car population instead of the price.
skyjuice
TRS Contributor