The government will propose to abolish the duty on Euro V diesel next month to relieve the burden of truck drivers amid skyrocketing oil prices.

However, the levy on ultra low sulphur diesel or petrol will not be amended and there will not be any fuel subsidy or waiving of the land premium of petrol filling stations.

"The government understands that the transport and logistics industries are facing substantial operational difficulties in the face of rising oil prices," said Secretary for Transport and Housing Eva Cheng in the Legislative Council yesterday.

A minibus driver fills up the tank at a gas station in Wan Chai yesterday. Edmond Tang

The government will put forward the proposal in the Legislative Council on July 9 before the current legislative session ends.

About 110,000 trucks in Hong Kong are using Euro V diesel. The abolition of the duty of 56 HK cents per liter will lower the retail price to about HK$11, and would cost the government about HK$400 million annually.

To encourage the use of Euro V diesel which is comparatively cleaner, the duty on ultra low sulphur diesel will not be remitted, Cheng said.

Ultra low sulphur diesel emits 80 percent more sulphur than Euro V diesel does.

Meanwhile, Cheng said the soaring oil prices did not curb the increasing use of vehicles or petrol consumption.

"For revenue, traffic and environmental reasons, the government has no intention to lower petrol taxes," Cheng said.

She reiterated the government would not offer fuel subsidies to any individual industry, or waive the land premium for petrol filling stations.

"This is inconsistent with the free market principle and level playing field championed in Hong Kong and would put a heavy burden on taxpayers and public finance," she said.

Legislators welcomed the proposal, but were concerned that oil companies may not pass the concession onto their customers.

Deputy Secretary for the Environment Roy Tang reassured that the administration is fully aware of the day-to-day changes in retail fuel prices.

"We will know if the duty concession is fully reflected on the retail prices of vehicular fuel," he said.

Fuel Price Concern Transportation Joint Conference spokesperson Stanley Chiang Chi-wai said the duty exemption could save each truck driver about HK$1,400 a month, but the help is inadequate.

He said the government should abolish the land value tax as it constitutes about HK$1.5 per liter of diesel.

Chiang said oil companies pass the cost of bidding for petrol filling stations onto consumers.

"Free market doesn't mean commercial organizations can take advantage of the consumers. The pricing of oil companies should be monitored and competition law targeting the oil industry should take effect as soon as possible," he said.

(HK Edition 06/24/2008 page1)