Motor Vehicle Taxes as Environmental Instruments: The Case of Singapore

Ngee-Choon Chia, University of Western Ontario


With small geographical size, land scarcity poses a potential constraint for economic growth in Singapore. Restraining car ownership and car use through motor vehicle taxes is part of the land-transport policy to ensure smoother traffic flow. The scale and scope of the motor vehicle taxes used have implications on government revenue and the environment. This paper analyses the use of motor vehicle taxes as environmental instruments. It compares the effectiveness of ownership versus use tax as tools to internalise congestion externality. Economic issues arising from motor vehicle taxes are also highlighted. It concludes that motor vehicle taxes offer Singapore a double dividend.