EFFECTS OF HIGHER PETROL DUTY

Mr J.B. Jeyaretnam asked the Minister for Finance and Minister for Health (a) whether the Government is still of the view in the light of what has happened since that its objective in raising the duty on petrol will be achieved; (b) whether there has been any drop in the revenue collected from the petrol tax after the higher duty was announced; and (c) if the objective does not look like being achieved and revenue has suffered, what steps does the Government contemplate next.

Dr Hu Tsu Tau: Ad Valorem duty on petrol was raised on 8 March 1985 from 50 percent to 60 per cent of pump price to discourage excessive use of cars. Following the increase in duty, petrol sales in April, May and June this year averaged 42.8m litres per month. This represents a drop of 8 per cent when compared to the same three months of 1984. Compared to the first three months of this year, it is a 10 per cent drop. The reduction is significant even allowing for the fact that some motorists are buying petrol in Johore Bahru. Therefore the increase in duty has had its intended effect.

Although petrol sales have dropped, revenue by way of petrol tax has increased. Duty from petrol sales in April, May and June this year averaged $38.2 million per month. This is about 33 per cent higher than the amount collected in the corresponding months of 1984 and 21 per cent higher than the amount collected in the first three months of this year.

There is no question that current measures to curb excessive use of cars are achieving the desired effect. My Ministry will continue to assess the impacts of these measures and modify or introduce new measures as and when necessary.