A vehicle quota integrated with road usage pricing: A mechanism to complete the phase-out of high fixed vehicle taxes in Singapore

This expository paper suggests a way to integrate a vehicle quota with usage based charging, including road pricing. It thereby challenges assumptions that ownership control requires high fixed vehicle costs. It focuses on Singapore, which famously has high purchase taxes and a Vehicle Quota System. These are effective but as a result of arguments against high fixed vehicle taxes, Singapore's authorities are gradually relaxing ownership control and increasing reliance on usage charges. This paper proposes a mechanism to 'variabilise' fixed taxes, including the vehicle permit price, in a way that is compatible with the vehicle quota. In particular, it proposes to integrate the vehicle quota with a new generation of electronic road pricing. This could make Singapore's shift to usage-based charging more efficient, complete and flexible while retaining the option to control vehicle numbers precisely.