The Legislative Council (LegCo) yesterday passed unanimously a motion calling for the abolition of the duty on Euro V diesel and reducing the duty on unleaded petrol by half.

The motion also urged the government to ensure that the concessions are fully passed onto the consumers.

The government pledged to speed up its review of fuel duty and to announce the result as early as possible, Secretary for Financial Services and the Treasury Chan Ka-keung said.

However, Chan ruled out any reduction of gasoline duty.

The abolition of the duty on Euro V diesel would cost the government about HK$400 million annually.

Meanwhile, about HK$2.7 billion out of the territory's annual HK$3.1 billion fuel duty comes from petrol. Reducing it by half would mean another drop of about HK$1.4 billion in government revenue each year.

Chan reiterated the role of petrol duty in traffic and air quality control.

Meanwhile, he said the Environment Bureau is constantly reminding oil companies to lower their prices whenever possible.

Lau Kong-wah, legislator of the Democratic Alliance for the Betterment and Progress of Hong Kong, said he was disappointed by the government's rejection to reduce gasoline duty.

Miriam Lau, Liberal Party legislator, hoped the government would accept the proposals by the LegCo instead of offering a temporary concession.

Raymond So, professor of the Chinese University of Hong Kong's finance department, said the middle class will still be under considerable financial pressure if the gasoline duty stands.

He also pointed out that the remission of diesel duty actually has little effect on the travel industry as it costs only 56 HK cents per liter.

The international crude oil price neared $140 (HK$1,092) per barrel recently, from $20 (HK$156) per barrel six years ago.

Furthermore, the government would not offer any subsidy on diesel fuel prices as this would contravene the principle of free economy and fairness in the city.

Legislators agreed that it would set a bad example if the government decides to subsidize industries affected by the soaring oil prices.

Fuel Price Concern Transportation Joint Conference spokesperson Stanley Chiang Chi-wai said the passing of the motion was within his expectation as he knew all along that the government could afford such cuts.

The transport industry staged protests over fuel prices last week and on Wednesday, causing traffic chaos in some parts of the city.

(HK Edition 06/20/2008 page1)