TAX POLICY ON PETROLEUM, DIESEL, FUEL OIL AND NATURAL GAS

TAX POLICY ON PETROLEUM, DIESEL, FUEL OIL AND NATURAL GAS:

(Review): 2.

Mdm Cynthia Phua asked the Minister for Finance in view of the high oil prices whether his Ministry will review its tax policy on (i) petroleum and diesel to help reduce cost to commuters and transport operators; and (ii) fuel oil and natural gas to lower the cost of power supply to households and businesses.

The Minister of State for Finance (Mrs Lim Hwee Hua) (for the Minister for Finance): Mr Speaker, Sir, the excise duty on petroleum is imposed on a volumetric basis – $0.41 per litre for 92- and 95-octane petrol, and $0.44 per litre for petrol rated 97-octane and above. The excise duty is therefore a fixed sum per litre of petrol. Government does not collect more petrol duties when pump prices go up.

We have no plan to lower the rate of petrol duty. The petrol duty is essentially a vehicular usage tax aimed at discouraging the excessive use of cars, and promoting greater use of public transport. These objectives remain relevant today.

There is currently no excise duty on diesel, fuel oil and natural gas used for generating power.

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