In an attempt to shore up the falling COE tax prices, the Singapore government’s central bank, Monetary Authority of Singapore, today (May 26) announced that car loan restrictions will be eased. The people can now borrow a greater debt up to 70% of the loan-to-value ratio as compared to the previous 60% limit, and the maximum debt period was increased from 5 to 7 years.
The ease of borrowing restrictions will shore up COE tax prices, which is now at its 4-year-low. Falling COE prices means a greater loss of tax income for the Singapore government. However the lucrative transport tax also greatly affects the goods prices and the general consumer price index, as delivery goods vehicles are equally heavily taxed. The current COE tax price for goods vehicles is at S$43,002, which costs as much as the luxury car tax at S$47,020.
Easing car loan restrictions will also increase congestion and the car population, which contradicts the “car-lite” society the government proposed. Earlier in April, Minister of National Development Lawrence Wong said that he will raise carpark charges to promote a “car-lite” society. Also just last year, Prime Minister Lee Hsien Loong was also harping about a “car-lite” society and reducing traffic congestion. It appears now the Prime Minister has changed his tune by increasing car population through ease of loan when he realize his government is losing taxes from the plan he proposed.
Neither Prime Minister Lee Hsien Loong nor Transport Minister Khaw Boon Wan has any comment regarding the easing of car loan restrictions.