Rationale for Annual Additional Flat Component in Electric Car Road Tax

96 Mr Chua Kheng Wee Louis asked the Minister for Transport (a) what is the rationale for the introduction of the Annual Additional Flat Component (AAFC) for road tax payable by electric cars; and (b) whether the Ministry will consider revising the AAFC to promote EV adoption.

Mr Ong Ye Kung: Most of our vehicle measures are designed to control congestion, through regulating the ownership and usage of vehicles. Congestion control is a very important aspect of sustainable development.

There are two types of usage charges. The first is for general usage, such as fuel excise duty. The second is for usage of congested roads, which is the purpose of the Electronic Road Pricing.

Electric vehicles (EVs), while much less pollutive, should not be exempted from usage charges. Since EVs are not subject to fuel excise duty, the additional flat component (AFC) is levied as an interim measure. It is not punitive, but a way to approximate equal treatment between EVs and non-EVs. In the meantime, we will study different approaches and options for distance-based charging that is fuel-independent.