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Soaring fuel prices prompt officials to consider action
The government is set to scrap the diesel duty within days,  a government source said, but academics have called the move shortsighted.
The abolition of the duty would be temporary, the source said, and whether it would last months or a year was being considered.
The source said the government was looking carefully into whether the tax exemption would apply to only Euro V diesel or would also  include ultra-low sulfur diesel.
Democratic Alliance for the Betterment and Progress of Hong Kong lawmakers and representatives of transport organisations met Secretary for Transport and Housing Eva Cheng  yesterday to express their concerns over soaring fuel prices.
'She clearly told us that abolishing the duty on diesel is feasible ... she replied that it would be done soon,' said legislator Lau Kong-wah,  who will move a motion in the Legislative Council today to cut duties on unleaded petrol and Euro V diesel by half.
But Ms Cheng later issued a press release saying the government had not made 'a final decision at this stage' but would review the tax  concession on Euro V diesel.
She also indicated the government needed to weigh public expectations for better air quality when considering whether to reduce the duty on less environmentally friendly ultra-low sulfur diesel even further.
Ultra-low sulfur diesel was introduced in Hong Kong in July 2000 and the government has been taxing it at the concessionary rate of HK$1.11 a litre instead of HK$2.89.
But the city's petrol stations stopped selling it when the government cut the tax on Euro V diesel, known as sulfur-free diesel, in half to 56 cents a litre in December.
Graeme Lang,  an associate professor at City University's Asian and international studies department, opposed the reduction or abolition of fuel duties, saying increasing costs were a sign to use less.
'It is shortsighted [to cut the duty] because it will not be a short-term problem ... fuel prices are going to go up,' he said.
Chinese University finance department associate professor Raymond So Wai-man  said waiving the diesel duty would not offer much relief to drivers, as the levy on Euro V diesel constituted only about 5 per cent of the fuel price.
'It may help the drivers in the short run, but it can't solve the problem,' Professor So said. 'It's not the duties that are expensive.'
A bad example would be set if the duty was scrapped, as it implied that the government would bow to those who demonstrated with angry protests such as blocking roads.
He said the government should target the heart of the problem, the shrinking logistics industry, which meant drivers earned less.
Lister Cheung Lai-ping,  chief executive of the Conservancy Association, urged the government to consider the impact of scrapping fuel  duties on the environment.
Fuel Price Concern Transportation Joint Conference spokesman Chiang Chi-wai  said a container truck driver could save HK$1,500 a month if diesel tax was waived.



Duty on diesel expected to be scrapped soon