SINGAPORE - After declaring its ambition to phase out internal combustion engine (ICE) vehicles by 2040, Singapore will make electric vehicles more attractive from next year (2021).

In his Budget speech on Tuesday (Feb 18), Deputy Prime Minister Heng Swee Keat laid out a number of measures to do this.

"Our vision is to phase out ICE and have vehicles run on cleaner energy by 2040," Mr Heng said, adding that this goal is for "both public health and climate change reasons".

First, the Vehicular Emissions Scheme, which metes out tax rebates and surcharges based on a vehicle's emission levels, will be extended to light commercial vehicles.

Second, an early-adoption incentive scheme will be rolled out for EV buyers from 2021 to 2023. It will offer rebates capped at $20,000 per vehicle.

Third, the road tax for EVs and some hybrids will be revised to be less punitive.

Fourth, Singapore will expand the EV charging infrastructure significantly from 1,600 points now to 28,000 by 2030.

But as excise duty from fuel sales contributes around $1 billion a year, Mr Heng said the Government will introduce a lump sum tax for EVs from 2021, starting at $100, then $200 in 2022, and $350 from 2023 onwards.

"Total road tax, after the revised in methodology and the new lump sum tax, will be higher for some EV models," Mr Heng said. "However, EV buyers can expect to enjoy substantial savings because of the significant EV Early Adoption Incentive."

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Mr Heng said the excise duty on fuel is a form of mileage tax to discourage indiscriminate usage, which will have an impact on pollution and congestion.