Motoring: The Singapore sting

You can bet, as New Labour's boffins thrash out the details of next year's big anti-car transport policy statement due in the Spring, that they will be casting an envious eye on one of the world's smallest yet most lucrative car markets (lucrative for the government, that is).

Singapore, where I've spent the past week, has the world's highest motoring taxes. A Ford Ka, pounds 7,995 to you or me in Britain, costs $S105,000 (pounds 42,000). A Land Rover Discovery costs pounds 140,000 (pounds 21,000 in Britain). The vast majority of that price is tax, of course. The official line is that the taxes discourage car growth, preventing traffic chaos in a small, rich city. This is no doubt a corollary. Just as attractive, these taxes are a massive cash cow, paying for numerous public projects.

On top of the car price taxes, motorists pay road tax averaging pounds 800 a year, and a road pricing levy for access to the city centre of about pounds 25 a month. Next year electronic road pricing starts: Singapore will be the first country to have it. Large gantries over city centre feeder roads will automatically "read" and deduct credits from pay-cards placed in the windscreen. Despite these costs, Singaporeans continue to buy their cars in growing numbers. Even in a small city state with good public transport, they want independent mobility.

The biggest single motoring tax is the Certificate of Entitlement (COE), an idea which could well appeal to some of New Labour's greener MPs. This year $S12 billion (pounds 4.8 billion) will be raised by them. You need one to register a car, and they are rationed every year to control car numbers. Their cost varies depending on engine size: the smaller the engine, the less it costs. A COE for a 2.0-litre Mondeo, for instance, is currently worth $S68,000 (pounds 27,000).

A COE lasts a car for 10 years. After that, another one is needed. As there is no concession for used cars, most old cars are scrapped. A few are exported to other Asian markets. Owners of valuable or prized classic cars usually fork out again. The number of new COEs issued every year is the same as the amount of old cars taken off the road, although the government typically allows for 3 per cent growth, to help satisfy car demand among Singapore's increasingly affluent population.

As an upshot, Singapore has an incredibly young car population. And, as old cars cause far more pollution than new catalysed models, the city air quality is usually good (at least it will be when the forest fires in Indonesia are put out - the smoke has been causing the most appalling haze).

No one is suggesting that Jaguar driver John Prescott will be pushing for four- or five-fold increases in car prices come May. Not even the greenest MP would suggest such a surefire way to block up the economy. But the car permit principle - the certificate of entitlement idea - would certainly appeal to some legislators for use in crowded conurbations. We certainly won't see it in May. But longer term, if traffic grows at the level forecast, it is possible in our larger cities - albeit at nothing like the cost of COEs in Singapore.

More probable in the short term is electronic road pricing, at least for those entering big conurbations. The results of the Singaporean system will be closely monitored.

Even more likely, next year we will see the biggest-ever jump in motoring costs. The RAC and the AA will complain, Friends of the Earth will welcome it, and "Honest" John Prescott will say he had to do it, for the sake of our kids. Some environmental good may come of it, if older polluting cars are penalised, and frugal new cars are encouraged. But by and large, we will keep on driving - just as they do in Singapore. Motorists are an almost limitless source of funds, owing to the massive appeal of cars. And the Treasury, just as in Singapore, knows it.