Government has further reduced the tax rate on diesel following a previous reduction in mid-June, the Government Information Agency (GINA) reported yesterday.

Minister of Finance Dr Ashni  Singh has announced that with effect from yesterday the tax rate on diesel would be decreased to 20 percent. At the start of this year, diesel was being taxed at 40 percent until June when the rate was reduced to 30 percent. The finance minister said that this decision was taken in light of the increase in the imported cost of refined fuel products observed in recent months.

In the case of diesel, the acquisition cost has climbed to US$90.72 per barrel, up from US$76.44 per barrel in mid-June 2009.

The reduction of the tax rate on diesel is therefore intended to help counter the increase in the world market price, cushion the impact on the cost of production of goods and services in the agricultural, fishing, manufacturing, commercial, and the services sectors, and ultimately minimise the impact of adverse external developments on domestic consumers, GINA reported.

Singh also noted that during last year several successive reductions in the excise tax rates on fuel were implemented by government at a total cost of $4.2 billion, to ensure that consumers were protected from volatile world market prices.