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The Legislative Council passed a resolution today (December 13) to extend the concessionary duty rate ($1.11 per litre) for ultra low sulphur diesel (ULSD) for two years.
The Government announced on November 23 the proposal to extend the concessionary duty rate for ULSD for 2 more years up to the end of 2008. The proposal has taken into account the pressure faced by the transport industry, Hong Kong's overall economic conditions and the Government's fiscal position.
In June 1998, the Government reduced the duty rate for regular motor diesel from $2.89 to $2 per litre as a temporary relief measure during the Asian financial crisis. When ULSD was first introduced in July 2000, the duty was set at a relatively low concessionary level of $1.11 per litre for environmental reasons in order to facilitate a switch from regular diesel to this cleaner, but more costly, fuel. Since then, diesel-fuelled vehicles in Hong Kong have completely switched from regular diesel to ULSD.
According to previous resolutions passed by the Legislative Council, the concessionary duty rate for ULSD was to be adjusted to $2 per litre on January 1, 2001 and to $2.89 per litre on January 1, 2002. However, on seven occasions, namely December 2000, June 2001, March 2002, March 2003, March 2004, December 2004 and December 2005, the Government, with the Legislative Council's agreement, extended the concessionary duty rate of $1.11 per litre, as a measure to provide temporary economic relief for the transport industry. This is the eighth extension of the concessionary rate for ULSD.
With the passage of the resolution on ULSD under the Dutiable Commodities Ordinance today, the duty rate for ULSD will remain at $1.11 per litre up to December 31, 2008. This concession will cost government revenue about $1.1 billion per year in 2007 and 2008.
Ends/Wednesday, December 13, 2006
Issued at HKT 17:33
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