C.1. Even as the voices against globalisation rise, we must strive to remain a vibrant and well-connected city that is highly liveable for our people and businesses. In this way, our people will be constantly in touch with and be energised by new ideas, concepts, people, services and products from all over the world. We will continue to make significant investments in critical economic infrastructure such as the new Changi Airport Terminal 5, the Kuala Lumpur-Singapore High Speed Rail and the Tuas Terminal to deepen Singapore’s connectivity to global markets.
C.2. We will also invest in shared infrastructure for economic clusters, so that industry players can network, pool resources and share knowledge. Last year, I spoke about how the Jurong Innovation District would be an exciting development to live, work and innovate in. The upcoming growth cluster in Punggol will co-locate cyber security and digital industries, with industry collaborating closely with the nearby Singapore Institute of Technology.
C.3. A vibrant city must also have diverse social spaces where people can come together, create shared experiences, and forge stronger bonds. We are currently working with the community to design the new Jurong Lake Gardens as our new national gardens in the heartlands. We will also continue to invest in more sports and arts facilities around the island. Beyond physical infrastructure, we are also enhancing sports and arts programmes. I will share more on these efforts later.
C.4. Our vibrant and connected city must also be sustainable and resilient. A high-quality living environment endears the city to its residents and visitors.
C.5. Around the world, the effects of climate change, and air and water pollution are worsening public health and quality of life. These harmful effects transcend national boundaries. As an island, Singapore is vulnerable to rises in sea level due to climate change. Together with the international community, we have to play our part to protect our living environment. In doing so, we secure a better future not only for ourselves, but for generations to come.
C.6. Singapore has joined more than 130 countries, including China, Japan and South Korea, in having ratified the Paris Agreement, re-affirming our commitment to address climate change and reduce emissions. It is in our own interest to support the international coordination required to deal with an issue that affects all countries, and in particular, small island states like ours.
C.7. There are different ways to reduce emissions. One is to ensure consumers understand the effects of their actions. So we have energy efficiency labels, like ticks on air-conditioners or refrigerators. Another is to regulate for higher standards. Singapore has good environmental protection standards and the Ministry of the Environment and Water Resources continues to ensure that our regulations are up-to-date. But the most economically efficient and fair way to reduce greenhouse gas emissions is to set a carbon tax, so that emitters will take the necessary actions.
C.8. Singapore has studied this option for several years. We intend to implement a carbon tax on the emission of greenhouse gases. We will consult widely with stakeholders, and aim to implement the carbon tax from 2019. The tax will generally be applied upstream, for example, on power stations and other large direct emitters, rather than electricity users.
C.9. We are looking at a tax rate of between $10 and $20 per tonne of greenhouse gas emissions. This is in the range of what other jurisdictions have implemented. It will create a price signal to incentivise industries to reduce their emissions, complementing the regulatory measures which we are also introducing. It will help us to achieve our commitments to reduce emissions under the Paris Agreement, do so efficiently and at as low a cost to the economy as possible. This may also spur the creation of new opportunities in green growth industries such as clean energy. Revenue from the carbon tax will help to fund measures by industries to reduce emissions. The impact of the carbon tax on most businesses and households should be modest.
C.10. The Government has started industry consultations and will continue to reach out. Public consultations will begin in March. The final carbon tax and exact implementation schedule will be decided after our consultations and further studies. We will take into consideration the lessons from other countries and prevailing economic conditions in Singapore in implementation. We will also provide appropriate measures to ease the transition.
C.11. Let me turn now to another source of environmental pollution – diesel. Apart from carbon emissions, diesel emits highly pollutive particulate matter and nitrogen oxides which are associated with an increased risk of lung cancer and respiratory infection7. The over-use of diesel vehicles has resulted in cities like London, Paris and Rome being enveloped in smog in recent years. Many of these cities have started taking action to reduce these harmful emissions. Athens, Madrid, Mexico City and Paris have announced plans to ban diesel vehicles from their city centres by 2025. Singapore must learn from these hard lessons.
C.12. Today, motor fuels such as petrol and compressed natural gas are taxed based on how much is used. This approach incentivises users to reduce consumption and manufacturers to develop more energy-efficient vehicles. However, for diesel, we levy a lump sum Special Tax on diesel cars and taxis, regardless of the amount of diesel used.
C.13. I will therefore restructure diesel taxes. I will introduce a volume-based duty at $0.10 per litre on automotive diesel, industrial diesel and the diesel component in biodiesel. Taxing diesel according to usage incentivises users to reduce diesel consumption. At the same time, I will permanently reduce the annual Special Tax on diesel cars and taxis by $100 and $850 respectively. In this way, we shift from an annual amount of tax to one which is related to usage. These changes will take effect today.
C.14. The Special Tax reduction will offset the impact of diesel duty for the majority of drivers. I strongly urge taxi companies to pass on the Special Tax reduction to taxi drivers.
C.15. To help businesses adjust, I will provide 100% road tax rebate for one year, and partial road tax rebate for another two years, for commercial diesel vehicles. There will be additional cash rebates for diesel buses ferrying school children. For the large majority of vehicles, the first year’s rebates will more than offset the diesel duty incurred in the same period. Details of the duty changes and offset measures are in the Annex. (Refer to Annex A-5).
C.16. I will also adjust two vehicle incentive schemes to encourage the use of cleaner vehicles.
C.17. The current Carbon Emissions-based Vehicle Scheme, CEVS, was implemented in 2013 to encourage take-up of cars and taxis with low carbon emissions. We will replace this with a new Vehicular Emissions Scheme, which will consider four other pollutants on top of carbon dioxide, so as to account more holistically for the health and environmental impact of vehicular emissions. With this scheme, we hope to nudge car buyers towards cleaner and environmentally-friendly models.
C.18. The new Vehicular Emissions Scheme will run for two years, starting from 1 January 2018. We will review it before it expires. In the interim, we will extend the current CEVS until 31 December 20178.
C.19. We will also enhance and extend the Early Turnover Scheme for commercial diesel vehicles. This Scheme was first introduced in 2013 to encourage the early replacement of older and more pollutive commercial diesel vehicles. Since then, vehicle owners have switched 27,000 vehicles to cleaner models.
C.20. As the Scheme is due to expire on 31 July 2017, we will extend the scheme for vehicle owners who turn over their existing Euro II and III commercial diesel vehicles for Euro VI vehicles until 31 July 2019, and further enhance the Certificate of Entitlement (COE) bonus period for Light Goods Vehicles.
C.21. The Minister for Transport and the Minister for the Environment and Water Resources will share more details at the COS.
C.22. Let me now speak about water. Water sufficiency is a matter of national survival. Imported water and local catchment water currently meet more than half of our water demand, but both sources depend heavily on weather conditions. To meet increasing water demand and strengthen the resilience of our water supply, we have invested in desalination and NEWater plants. These are costly but necessary investments which we must continue to make.
C.23. We have priced water to reflect the higher costs of desalination and NEWater production because every additional drop of water has to come from these two sources. The cost of water production and transmission has increased as we build more desalination and NEWater plants, and lay deeper pipes through an urbanised environment. Water prices were last revised in 2000, almost 20 years ago. We need to update our water prices to reflect the latest costs of water supply.
C.24. We will increase water prices by 30% in two phases, starting from 1 July 2017. As part of the exercise, we will be restructuring the Sanitary Appliance Fee and the Waterborne Fee into a single, volume-based fee. This is more reflective of the volume of used water discharged. The details are in the Annex. (Refer to Annex B).
C.25. For three-quarters of our businesses, the increase will be less than $25 per month, once the increase is fully phased in on 1 July 2018. For 75% of households, the increase in monthly water bills will be less than $18. We will have measures to help lower- and middle-income households manage this increase. I will give details later.
C.26. Today, we impose a Water Conservation Tax on potable water, to promote conservation. To encourage the conservation of NEWater among industrial users, we will also impose a Water Conservation Tax on NEWater, which will be 10% of the NEWater tariff, starting from 1 July 2017.
C.27. The various emissions and water-related measures in Budget 2017 are necessary to protect our living environment. These will help keep our home in good shape for future generations. It is the right thing to do, even though some of these measures will lead to increases in household costs. The Government will help households, especially low income ones.
C.28. Before I speak on these household support measures, let me first speak on our measures to build a caring and inclusive society.
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