Why a VW Polo would cost you more in Singapore than a Porsche in Germany
You will fly out of your socks when you read this!
What makes Singapore unique?
While Monaco citizenship is a dream that only a chosen few can ever turn into reality, Singapore can easily match and even surpass the European principality in luxurious lifestyle. But when it comes to cars, thing couldn't be more different. So why is that?
While considerably bigger in are than Monaco (the second smallest country), most of Singapore's area is spread between islands, leaving a small piece of mainland, where most of the population is living. And while the mainland is still bigger than Monaco, the population of Singapore is measured in the millions, without counting the tourists. It is very densely populated piece of land, which leads to some peculiar tax laws for cars.
Credit: Royal Caribbean
Buying and maintaining a vehicle in Singapore is an expensive luxury due to limited road space. The mainland of Singapore measures just 50 km from east to west and 27 km from north to south. The population currently stands at around 5.7 million people, unlike Monaco's permanent population of around 40 000! It's no surprise that Singapore’s road density is much higher than most other countries. There is 493.5km of road per 100 km2 which makes it nearly 50-times higher than sparsely-populated Australia.
The roads occupy 12% of Singapore’s land area, compared to 14% for housing. This is insane! The number of cars per kilometre of road is much higher in Singapore too at 278 vehicles per square km. About 14-times Australia’s figure! Being a small city state means the number of vehicles per 1000 population is much lower than many large, car-reliant countries at 162.5, or compared to 805 in the United States. And here's why.
Taxation for . . area preservation
Let's start listing all the piles of money you have to pay in Singapore in order to own and drive a car. The very first thing is the Original Market Value (OMV for short) which is basically the price of the car before any taxes and fees. For a base trim VW Polo that's just around $13 432. So far - so good, but this is where things start to get expensive.
Excise Duty is the first tax to hit your wallet and it's 20% of OMV. For the Polo, that duty will be $2684. Then comes the Goods and Services Tax (GST for short), which is only 7%, but it's taxed on the OMV + Excise Duty! Basically paying a tax for your tax. This is $1127.50 out of your pocket. And that pocket better be mighty deep, because that's just the start!
The real sense of getting poor comes with the Additional Registration Fee (ARF for short). This one is depending on the price of your car as follows:
Up to $20 000 the ARF is 100% of the OMV
From $20 001 to $50 000 ARF equals 140% of the incremental OMV
Anything above $50 000 means 180% of the incremental OMV
So a base trim VW Polo fits in the lowest category and you just have to pay ARF like you're buying another Polo - $13 432. And options are taxed the same way as well, so you can forget those electric mirrors and learn to move them with your arms. By now this car costs $30 658. And that's it! But owning and driving your car in Singapore are two completely different things.
To do that, you need to obtain a Certificate of Entitlement. This will allow you to drive your car for up to 10 years. It's not a driving license, but rather a car permit. It has multiple categories and can vary wildly, depending on the engine displacement and power. Fancy a new Porsche Taycan Turbo S? Better stick to that 1.0 TFSI VW! Being that it fit in the smallest category, the small Polo will only set you back around $48 000!!! It's a piece of paper that is worth more than the actual car!!! By now this GOLDEN (as it seems) VW Polo would cost you around $78 600 (USD)!!! You want the bill for that shiny new Taycan? It goes just north of $600 000...
Credit: The Singapore Beacon
It seems absolutely insane, but taking into account the mentioned above population density and the lack of land area - it's a necessary evil. Although it's not entirely fair for the consumer to pay that price. People in Singapore are (mostly) not poor and they pay it to own and drive a vehicle. Probably nothing fully specced out, which in Germany won't cost you an arm and a leg, like a base trim Polo in Singapore, but people don't skip on mobility.