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The Legislative Council passed a resolution today (March 24) to implement the extension of the concessionary duty rate on Ultra Low Sulphur Diesel (ULSD) proposed in the 2004-05 Budget.

The Financial Secretary announced in his Budget Speech on March 10 that he proposed extending the concessionary duty rate on ULSD until the end of the year. The proposal has taken into account the many difficulties that the transport industry and other related sectors are facing, even though the economy has started to recover.

When ULSD was first introduced in July 2000, the duty was set at a relatively low $1.11 per litre for environmental reasons in order to facilitate a switch from regular diesel to this less-polluting fuel. Since then, the diesel-fuelled vehicular fleet in Hong Kong has completely switched from regular diesel to ULSD.

"According to previous resolutions passed by the Legislative Council, the duty on 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 four occasions - end-2000, June 2001, March 2002 and March 2003 - the Administration, 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," a Government spokesman said.

With the passage of the resolution on ULSD under the Dutiable Commodities Ordinance (Cap. 109) today, the duty on ULSD will remain at $1.11 per litre up to December 31, 2004. The duty will revert to $2.89 per litre on the expiry of the concession, that is, on January 1, 2005. This concession will cost government revenue $0.9 billion in 2004-05. The cumulative cost of ULSD concessions will amount to $6.8 billion.

Ends/Wednesday, March 24, 2004

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