I refer to Mr Steve Tan's letter, "Anomalies on the road to 'greener' vehicles" (ST, Jan 24).

Mr Tan commented that there is an anomaly in the pegging of road tax for environmentally friendly vehicles and mentioned the Lexus RX400h, a hybrid petrol-electric car, as an example.

Under the road-tax structure, the road tax on cars has a progressive element based on social-equity considerations that use engine capacity as a proxy for the relative value of a car. Hence, owners of cars with higher engine capacities pay a progressively higher tax rate.

We use engine capacity as it is part of a vehicle's technical specifications, and not subject to external fluctuations, like a vehicle's Open Market Value (OMV). For electric-powered cars, power ratings equivalent to the engine capacities are used, as electric motors are rated in kW rather than in the cubic centimetres of a conventional engine.

The road tax for hybrid cars is the higher of the road tax payable, calculated based on either the engine capacity of its conventional engine, or the maximum power rating of its electric motor. Hence, the road tax on the hybrid is already lower than if we used the maximum aggregate power developed by both its engine and electric motor as these work in tandem to drive the car.

For most hybrids, like the Toyota Prius, the road tax is determined by their engine capacity. However, for recent high-end SUV and MPV hybrids with powerful motors, like the Lexus RX400h, their road tax is determined by the power rating of their electric motors. However, owners of these hybrids still pay less road tax than for a conventional car with an engine capacity that develops power equivalent to the aggregate power of such a hybrid's engine and electric motor.

Taking into account the road-tax framework, the Government offers a Green Vehicle Rebate worth 40 per cent of the OMV of a vehicle that can be used to offset the upfront taxes, in order to help motorists who are willing to switch to environmentally friendly vehicles, such as CNG, electric and petrol-electric hybrid cars.

Naleeza Ebrahim (Ms)
Deputy Director, Media Relations
Land Transport Authority