Sustaining the environment for future generations

Carbon tax, increase in water prices among key announcements.

20 Feb 2017

Environmental sustainability was a key part of Finance Minister Heng Swee Keat’s Budget 2017 speech, as he announced increases to the water price, the implementation of a carbon tax from 2019, and changes to several vehicle schemes to encourage the use of cleaner vehicles.


In order to meet increasing water demand and to strengthen the resilience of Singapore’s water supply, the Government has invested in desalination and NEWater plants. This has led to an increase in the cost of water production and transmission.

To match the higher costs of water supply since the last revision in 2000, water prices will increase by 30% in two phases, starting from 1 July 2017. The Government will also restructure the Sanitary Appliance Fee and the Waterborne Fee into a single volume-based fee. A Water Conservation Tax on potable water and NEWater will also be imposed to promote conservation.


Reducing carbon emissions: the Government will implement a carbon tax on the emission of greenhouse gases from 2019, with a tax rate of between S$10 and S$20 per tonne of greenhouse gas emissions. Industry consultations have started, with public consultations due to begin in March.


As part of the Government’s efforts to encourage the use of cleaner vehicles, changes to several vehicle schemes were announced.

Restructuring of diesel taxes: A volume-based tax of S$0.10 per litre will be introduced on automotive diesel, industrial diesel and the diesel component in biodiesel. This is to incentivise users to reduce diesel consumption.

The annual Special Tax on diesel cars and taxis will be permanently reduced by S$100 and S$850 respectively. Diesel buses that ferry school children will receive additional cash rebates.

Introduction of new Vehicular Emissions Scheme: The current Carbon Emissions-based Vehicle Scheme (CEVS) will be replaced by the Vehicular Emissions Scheme on 1 January 2018. The new scheme will consider four other pollutants on top of carbon dioxide. In the interim, the CEVS will be extended to 31 December 2017.

Early Turnover Scheme: The Early Turnover Scheme for commercial diesel vehicles, introduced in 2013 to encourage early replacement of older and more pollutive commercial diesel vehicles, will be extended to 31 July 2019. The COE bonus period for light goods vehicles will also be enhanced.