A two-year extension to the concessionary duty rate for ultra-low sulphur diesel will be proposed to legislators December 13, the first time the Government has recommended such a long extension.

If passed, the concessionary duty rate will remain at $1.11 per litre until the end of 2008. The move will cost the Government $2.2 billion during the period.

This is the eighth time the Government has proposed to extend the concessionary rate, but the duration of previous extensions was no more than one year.

The two-year idea takes into account the transport trade's operating environment, and overall economic and public finance conditions. It will help the industry face the pressure of high oil prices.

As the concessionary rate is already relatively low, there is little room to reduce it further. Any extra revenue loss from such a move will not be justified by the ensuing benefit to the transport industry.