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What is the rationale to impose CNG duty charges?



Since the introduction of CNG vehicles in 2002, the vehicle owners have been enjoying the following concessions:
(a) Green Vehicle Rebate (GVR); and
(b) Exemption from special tax and unit CNG duty, taking into account their cleaner PM2.5 (particulate matter) emissions relative to diesel vehicles.

These are temporary concessions, which were given at a time when the population of CNG vehicles was small. They were meant to help build a critical mass of CNG vehicles and the accompanying CNG refuelling infrastructure. The continued adoption of CNG vehicles must however be self-sustainable without long-term government support.

After a passage of 10 years, less support should be needed. From 1 Jan 2012, a unit CNG duty will be introduced. This was announced in Budget 2009 to give sufficient advance notice to CNG vehicle owners.

The unit CNG duty of $0.20 per kg is significantly lower than the $0.41 per litre that we currently levy on petrol. CNG vehicles will continue to be on the GVR scheme until the schemes expiry on 31 Dec 2012. 

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