Written Reply to Parliamentary Question on Water Conservation Tax Rates by Ms Grace Fu, Minister for Sustainability and the Environment

Written Reply to Parliamentary Question on Water Conservation Tax Rates by Ms Grace Fu, Minister for Sustainability and the Environment

Mr Leon Perera: To ask the Minister for Sustainability and the Environment (a) what is the rationale for there being only two water conservation tax rates for potable water usage; (b) why is 40 cubic metres set as the threshold between the two tax rates; and (c) whether the Ministry will consider conducting trials on introducing a more progressive, multi-tiered volumetric water conservation tax.

Answer:

1 The Water Conservation Tax, or WCT, serves to encourage every individual and business to play a role in conserving our precious water resources.

2 The WCT has a 2-tier rate structure with the first 40 cubic metres of water drawn per month attracting the basic rate, and the volume above 40 cubic metres at a higher rate to discourage consumption. This structure has been implemented since 2000, with the lower-tier WCT covering the majority of households. WCT has an effect of conserving water over time. We have seen an increasing proportion of households that consume less than 40 cubic metres of water per month since then. Today, 96% of households pay only the lower-tier WCT rate.

3 We price water to reflect its scarcity value. We do not see the need to introduce more tiers. For lower income households, the Government provides targeted assistance for their utility bills through GST U-Save rebates and vouchers.