How does the budget 2013 affect you?

[alantannottam]

Looking the amounts of posting here one can help to see that there were so many things in the budget but the one thing that people care about seems to be cost of Cars..... ;-)

haha, agree. maybe thats because the public transport services in Singapore SUCK!!!
pay more and more (fees increase), and they still suck!
thats why the cost of owning a new car relates to more people (first time owner and specially those with kids). .

[yattokame]

haha, agree. maybe thats because the public transport services in Singapore SUCK!!!
pay more and more (fees increase), and they still suck!
thats why the cost of owning a new car relates to more people (first time owner and specially those with kids). .

having spent some time living and working in Japan I think it's still not too bad here. It's cheaper, the trains are definitely newer (except for the JR yamanote in tokyo - I miss those TV ads) and seriously not as crowded during peak hours.

While I have a car I still take public transport to and fro work.

[focus69]

Hi all just my own view

Be it rich or poor, each have his or her own reason to buy a car.
Me as average income fall below middle income......i need a car to work....travelling from home to Office, from office to various Shipyard in Singapore, Ports and Jetty......
Transport to me, helping me to earn a living.....not show off flashy kind of things.....

But now the new rules...going to kill me once my Car COE end at end 2015.......
Unless company willing to increase my car allowance high enough to rent a car.....then is fine.....if not that it no car no current job which i can live enough.....

To fork out $40k to $70K or more for down payment using hard earn saving is a pain........i always believe cash is king and keep for rainy days....

Cheers

[shuseido]

Thanks for the clarification and now make sense. At least stating the facts and no more confirm this + confirm that. Agreed MYsia is nowhere as safe as SG. Peace out...

[wolfeyes1974]

Hi all just my own view

Be it rich or poor, each have his or her own reason to buy a car.
Me as average income fall below middle income......i need a car to work....travelling from home to Office, from office to various Shipyard in Singapore, Ports and Jetty......
Transport to me, helping me to earn a living.....not show off flashy kind of things.....

But now the new rules...going to kill me once my Car COE end at end 2015.......
Unless company willing to increase my car allowance high enough to rent a car.....then is fine.....if not that it no car no current job which i can live enough.....

To fork out $40k to $70K or more for down payment using hard earn saving is a pain........i always believe cash is king and keep for rainy days....

Cheers

How do we define middle class income family in SG?

[Oceanklassik]

My personal view is $5k pm to $50k pm falls under middle class income.
It just depends wheher we are talking individual or household.

"$5k pm to $50k pm" ... very very wide gap le

IMO, I do not see $50K (pm) household income as middle. It should be way above already. Sadly, my household income (pm) can't even reach a 5-figure sum amount

[wolfeyes1974]

My personal view is $5k pm to $50k pm falls under middle class income.
It just depends wheher we are talking individual or household.

individual and household (just husband and wife) then. i always wonder how government define middle class in SG

[Oceanklassik]

I think it is difficult to define but I think it should be those who are "unqualified for low-income subsidies and struggle financially to make ends meets in other areas". I recall having read somewhere that the lower-mid income population earns an average of between $2,500 and $3,000 (pm) on individual income.

[wolfeyes1974]

Copy and paste from an article.

With the new restrictions from MAS on car loans and also on the New Tier Tax Structure on ARF taxes announced as part of Budget 2013, I thought I will list the following out to help people understand car buying in general in Singapore.

Car prices in Singapore are priced on the following:

A) OMV (Open Market Value): OMV is assessed by the Singapore Customs, taking into account purchase price, freight, insurance and all other charges incidental to the sale and delivery of the car from country of manufacture to Singapore. This means your beloved set of wheels actually costs lesser from the manufacturer and the OMV is not the selling price from the manufacturer to the local authorized dealer. If you are looking for the OMV of any vehicles, you are welcome to click on the following link:

http://www.onemotoring.com.sg/publis...ket_value.html


B) COE (Certificate of Entitlement): This is pretty much self-explanatory. Every neighborhood Uncle / Aunties /Ah Gong / Ah Ma knows about the COE. We have Cat A, B, C, D, and E. For the benefit of discussion on private motor vehicles, we really only need to be looking at Cat A: (1600CC and below), Cat B: (Above 1600CC), and Cat E: (Open Cat, where we can use it for vehicles in both Either A or B).


There are a lot of critiques on whether the current COE system actually does what it was intended for, and also with many people crying for a revamp of the system, but I’m sure with the new MAS ruling and New Tier tax structure on the ARF announced just last night, these people probably would have wished that they have shut up instead because they just received 1 mega driver slap in their faces from our ruling party despite predictions that COE prices will come down with the new MAS Ruling working hand in hand with the New Tax Rate Structure on ARF if Budget 2013 is approved and moved in Parliament. (mildly is my guess).

C) ARF (Additional Registration Fees) 100% of the OMV based on the existing ruling before Budget 2013. This translates to a pure gravy transfer from our bank account into the government coffer.


With Budget 2013, a new tier ARF tax structure is in place. If the OMV of your dream vehicle is;


Example: OMV of an Entry level BMW 320I is currently at $36, 486 (Based on the link above). The ARF for this vehicle will now be 100% of the first $20,000 and 140% of the remaining $16,486 which is $23,080. Adding both $20,000 and $23,080 gives you the final ARF of $43,080.

You are now paying an extra $6594 ($43,080 - $36,486) because the OMV is > $20,000. So in short, the higher the OMV, the more ARF you pay.

D) Excise Duty: 20% of the OMV. This is a straight up additional form of duty fees imposed on top of the ARF that goes straight to the Government account.

E) GST: 7% GST on the Custom Duty + OMV. A form of consumption taxes that is imposed to transfer your hard earned cash into the government account based on the value of goods that you have consumed.


F) Registration Fees of $140. (Well, someone needs to do the administrative tasks and all the paperwork required right? We have a first world civil services and they really need to be paid).

G) Vehicle Plate Fees of $30. You wheels needs to be properly identified and tag so that it makes our friendly “Summon Auntie” job easier. They do need to take down your car license plate if you have over parked or parked in a lorry lot (sounds familiar?), or for our brave TP who chases you down the PIE at 150km/h.

H) Whatever else more you paid on top of the 7 points above = Authorized Dealer’s profit. You can’t expect them to do all this for you for free, can you? Btw, this is a really very huge margin after you do your calculation. But I don’t blame them. They need to pay good commission to their Sales Executives and also on their marketing campaign (VW is really good at that I must say). In addition, as one of my friends, KC had pointed out, the AD also bears the Warranty of the vehicle for whatever amount of years they promised to you in the sales agreement, together with an "X" number of times of free servicing which they deem ok to dish out.


I) CEV (Carbon Emission Vehicle) Rebates or Surcharge: Finally, after all the 8 points above, we are finally getting some form of rebates (or Surcharges Ha-ha). To keep things simple, rebates are given from $0 to $20,000 if your vehicle is environmentally friendly and penalized with Surcharge from again $0 to $20,000 if it pollutes mother nature and our ozone layer.


To put things into perspective, I will provide an example of a cost breakdown of all factors listed above that makes up the car prices with the New Tier Tax Structure on the ARF with 2 examples below. (I.E. Friendly Family Toyota Altis 1.6L, and a Higher end Luxurious BMW 320I 2.0L )


* Assumption: I have not included the CEV into the calculations for both examples.

* I have also used the COE based on the 2nd Open Bidding for Month of Feb-2013 with the New Tier Tax structure on OMV > $20,000 in Example 2 below for the BMW 320I 2.0L

* Please also note that OMVs values are not always the same even on the same model of vehicles and they fluctuate with every shipment (mild fluctuation really). This in turns cause ARF values to change as well as Custom Duties and GST. Of course COEs are on bidded basics as well. Therefore car prices are always volatile.


Example 1: Toyota Altis 1.6L
1.OMV: $15,270
2.COE: $78,301 (Based on 2nd Open Bidding for Month of Feb-2013 for CAT A)
3.ARF: $15,270 (100% of OMV only since OMV is less than $20,000)
4.Custom Duty: $3,054 (20% of OMV)
5.GST: $1,283 (Based on 7% of OMV + Custom Duty)
6.Registration Fees: $140
7.Vehicle Plate Fees: $30

Total Cost of Car: $113, 348 (Add up all 1 to 7 together)

Borneo Motor List Price: $139,988 (Price with Guaranteed Gold COE within 3 months from Borneo website)

Difference: $26,640 (Translates to Profits for Borneo Motor or whatever they can keep after their operating costs are subtracted.)



Example 2: BMW 320I 2.0L
1.OMV: $36,486
2.COE: $92,667 (Based on 2nd Open Bidding for Month of Feb-2013 for CAT B)
3.ARF: $43,080 (Additional Tax Structure of 140% applies to excess $16,486)
4.Custom Duty: $7,297 (20% of OMV)
5.GST: $3,064 (Based on 7% of OMV + Custom Duty)
6.Registration Fees: $140
7.Vehicle Plate Fees: $30

Total Cost of Car: $182,764 (Add up all 1 to 7 together)

Performance Motor List Price: $216,800

Difference: $34,036 (Translates to Profits for Performance Motor or whatever they can keep after their operating costs are subtracted.)



In conclusion, I hope this article have helped car buyers understand what they are paying for when they go car shopping and also a deeper appreciation of the amount of money that really ends up with the government because if you look at both examples above, significant amount of what you paid for your car goes to them (Point 2, 3, 4, and 5)


With the new MAS ruling already in effect today, many are anticipating that COE will drop due to lesser demand as the lower middle class looks very likely to be squeezed out of the market with a 40% or 50% down payment depending on the types of car they would like to purchase. The middle and upper middle class would also be struggling to purchase a vehicle due to the same reason above and also with the additional higher monthly installment over a 5 years max loan tenure.


This maximum loan tenure of 5 years might also create an adverse impact on the bank’s interest rate (currently at 1.88%). It is highly likely that our banks will be increasing interest rates for car loans now due to shorter loan tenure and smaller amount of principal amount loaned.


My own prediction is prices of COE will drop but the drop will not be significant mainly because COE growth rate is currently reduced to 0.5% from February 2013 onwards and on top of that LTA has also reduced the amount of COE allocated from the total pool for CAT E: Open Category for which is usually used for Luxury Car further from 20% to 15%. With lesser supply, and steady demand. It is very unlikely prices will flucutuate wildy.


The rich will still be able to afford new vehicles as they are cash rich, but in a way they will also be paying more (alot more, really) because of the New Tier tax structure. The New Tier Tax Structure translates to a whopping increment of 180% tax imposed on cars with OMV > $50,000 and believe me when i say that is alot of additional cash they have to shell out just to own a supercar. (Porsche, Lamborghini, and Ferraris are no longer as cheap as it once was to them and if they really do purchase it, we can all shout "Hurray" because Budget 2014 will see those money translates into social spending, hopefully).


In all scenarios, I think the best thing to do now is to exercise constraints and prudence. Cash is King in Singapore. Waiting for the situation to play out and watching how these changes impacts the automobile industry as a whole and how the automobile industry reacts to them will be the better option for now.


Footnote: Entry Level Porsche 911 3.8L OMV average is $132, 053. And we are not even going to talk about Lambo or Ferraris where their OMV are in ranges of $350,000 and up. This translate to an ARF of $20,000 for the first Tier of OMV of 100% , $42,000 on the second tier between $20,001 to $50000 range at 140% , and a whopping $147,695 on the last tier for the remainer amount at 180%.


Effectively, the new ARF for a Porsche now is $209,695, a good $77,000 increase from what it was before. Think about what you want to do with all that money instead.

[wolfeyes1974]

I think it is difficult to define but I think it should be those who are "unqualified for low-income subsidies and struggle financially to make ends meets in other areas". I recall having read somewhere that the lower-mid income population earns an average of between $2,500 and $3,000 (pm) on individual income.

Or could be be household earning less than $12k combined for couples using the EC criteria? Sometimes I think government should clarify their benchmark so that citizens like us can understand.

[pegasi]

According to the Department of Statistics, for yeasr 2012,

Average monthly household income from work incl employer CPF contribution = $10,384

Average monthly household income from work incl employer CPF contribution per household member = $3,142

Include both citizens and PRs.

And if you think Chinese is the highest income group among all races, you are wrong

[pegasi]

Or could be be household earning less than $12k combined for couples using the EC criteria? Sometimes I think government should clarify their benchmark so that citizens like us can understand.

Bechmarkings are done for sure, against the statistics. But I don't think the government define what range fall under what class.

[pegasi]

Ranking (per househould income)

1st - 10th: 1,644
11th - 20th: 3,302
21st - 30th: 4,782
31st- 40th: 6,183
41st - 50th: 7,608
51st - 60th: 9,133
61st - 70th: 10,894
71st - 80th: 13,186
81st - 90th: 16,366
91st - 100th: 30,379

If your total household income exceeds $30K per month, congratulation - your family is among the top 10%.

[pegasi]

Just to clarify again - I am not MIW. Neither do I work for them.

[pegasi]

Actually median is more relevant than average in the topic of "what is middle class".

Average is based on fair-share, while median takes into account the distribution pattern.

But I can't find the median figures beyond year 2010.