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Drivers Unhappy Despite Dropping Of Diesel Tax

Transport workers see little relief

Dennis Eng and May Chan – Jun 24, 2008 – SCMP

The scrapping of tax on Euro V diesel would do little to alleviate high fuel costs, truck drivers and public transport operators said yesterday, refusing to rule out more fare rises.

Their comments came after Secretary for Transport Eva Cheng, speaking to legislators, said the 56 HK cents per litre duty on Euro V diesel would be dropped, while the duty on ultra-low sulfur diesel and petrol would be unchanged. She said the move would affect 130,000 vehicles and save drivers HK$600 to HK$700 a month.

The policy was designed to encourage use of Euro V diesel, which emits about 80 per cent less sulfur and 5 per cent fewer particulates than Euro IV fuel.

Ms Cheng denied the government had caved in to public and industry pressure and legislators largely welcomed the relief measure.

Spokesmen for Shell and Exxon Mobil said they would reflect the duty waiver in their pump prices as soon as possible once the change was ratified.

Lai Kim-tak, chairman of the Medium and Heavy Truck Concern Group, did not hold out much hope that the tax exemption would offer appreciable long-term relief.

“There will be no guarantee of affordable fuel prices unless the government promises to regulate and monitor fuel prices,” he said.

Lai Ming-hung, a spokesman for the Taxi and Public Light Bus Concern Group, said the measure would not benefit the majority of taxis and minibuses, which had been converted to run on the cleaner liquefied petroleum gas.

“Taxis and minibuses may still feel pressure to raise their fares if fuel prices remain high,” he said.

Taxis have already succeeded in raising the flagfall by HK$1 to HK$16 in urban areas and HK$13.50 in the New Territories.

Chiang Chi-wai, a spokesman for the Fuel Price Concern Transportation Joint Conference, which welcomed the concession, said the government should lower the land premium on petrol station sites.

The tendering system for operating licences for the stations should also be reviewed, Mr Chiang said. The leases for petrol stations are not automatically renewed but put up for tender. The high land premium payable on the sites is often cited by the transport and logistics trade as a reason for the high price of fuel in Hong Kong.

But Ms Cheng said land prices were determined by market forces and the government would not subsidise any one particular trade by scrapping the premium.

Deputy secretary for the environment Roy Tang Yun-kwong said the government kept a close watch on fuel prices and had measures in place to ensure the change in duty was passed on to drivers.

The 56 HK cents per litre duty for Euro V diesel was introduced for two years on December 1 last year.

The Transport and Housing Bureau said it hoped the exemption could take effect during this Legislative Council session, but it could consider imposing the duty again in future.

In line with the EU, the government plans to make Euro V the required minimum for diesel vehicles from January 1 next year. Euro V can be used by all existing diesel vehicles.

Duty shall be payable on hydrocarbon oil (other than ultra low sulphur diesel and Euro V diesel) at the following rates per litre –

(a) aircraft spirit – HK$6.51
(b) light diesel oil – HK$2.89
(c) motor spirit (leaded petrol) – HK$6.82
(d) motor spirit (unleaded petrol) – HK$6.06

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