The Curious Case Of The Hikes…
On 30 June 2016, the Urban Redevelopment Authority (URA) and the Housing Development Board (HDB) issued a joint statement announcing the increase of public car park fees.
Beyond the actual breakdown in car park fees, the statement only mentioned that this was the first hike in public car park charges in 14 years, and this was lagging behind inflationary rises in costs.
In one news report, it was mentioned that this measure was taken to “reduce the gap between the fees charged by private and public car parks.” And that this would only come into effect from the end of the year.
At the time, to us, seemed a logical move and there was a really long time in between when prices were not hiked – very understandable.
Then, we became a little bit suspicious. Less than a week later, on 02 July 2016, Straits Times ran an article reporting that malls and office buildings were set to charge higher car park fees when public car park fees goes up in December. And the best was “Industry insiders say private carpark operators peg their fees to public rates and would raise them in tandem with the coming hike.”
So public car park fees were going up to reduce the gap between fees charged by private and public car parks. But, private car park fees were also going up because public car park fees were going up.
Additional Revenue By The Government
By the looks of it, the URA and HDB are executing public car park fees hike of between 20% and 35%. How much will this translate into additional revenue?
According to its most recent financial statements, HDB earned roughly $595 million from car park fees in 2015. The only fees associated to maintaining these car parks were costed as $79 million.
For URA’s most recent financial statements, revenue came in at $71 million. The only costs, which included property maintenance as well, came up to $12 million.
At the minimum, a good guess would see HDB and URA rake in $119 million and $14.2 million in additional fees respectively. This is even more than the entire amount allocated to its current costs. Perhaps there are more costs associated with upkeeping car parks than we know, and we think this should be explained.
A recent write-up on Gov.sg states that both HDB and URA expects to make losses from its car park activities in the coming years. Perhaps further elaboration is required.
Should We “Tax” Second Cars More?
Don’t get us wrong, we’re not complaining about the hike, we just think more could be explained. As always, we cheer whenever the government (HDB and URA on this occasion), decides to “tax” the rich a little bit more in hopes that it would ease the burden on those less well off in society.
This sprung to mind when we sifted through the details of the impending hikes and saw that residents with a second car attached to them will have to fork out for even higher fee increases.
This would not be a good method to “tax” residents as the cost of maintaining the car parks does not increase if a resident has one or two cars. In addition, the really rich do not even pay for this increase in parking fees as they mostly park in houses or condomimiums.
This kind of “tax”, in our opinion, would be more effective via the bidding for the Certificate of Entitlements (COE). People should be less “entitled” if they already own a car. Perhaps only then would residents who really require cars, but are unable to afford them currently, finally have the ability to buy a car.
Listen to our podcast, where we have in-depth discussions on finance topics that matter to you.