You have tried your best to reduce your fuel consumption, but with ever-increasing pump prices, it’s harder to control your spending on petrol. The Government’s announcement that it will reduce the supplementary tax for diesel cars during this year’s Budget may be good news to some.

Currently, a diesel car attracts a road tax and a special tax, which is four times the annual road tax. From July 1, 2008, the special tax structure for Euro IV-compliant private diesel passenger cars will be changed to an absolute-dollar tax based on the engine capacity of the car, at a rate of $1.25 per cubic centimetre of engine capacity, subject to a minimum tax of $1,250. As a result, the special tax for Euro IV diesel cars could be reduced to about 2.7 times the normal road tax.

However, the total tax will still be higher than that of an equivalent petrol-engined car. So what’s the point of this whole exercise?

Advantages of diesel

For the greenie, driving a diesel car might be an eco-friendlier way to travel – after all, the revision was made in recognition of the improved emissions of Euro IV diesel cars for both particulate matters and carbon dioxide, and the fuel efficiency of diesel engines.

Euro IV is a EU emission standard that limits car emissions to 0.25g/km of nitrogen oxides and 0.02 g/km of particulate matter.

For the cost-conscious, it could mean a potential way to lower fuel expenditure as diesel engines offer better fuel consumption, at least 25 per cent less than a petrol engine of equivalent displacement. They also have very high torque, which translates to sportier performance.

Some car companies are already doing their sums and calculating whether it makes business sense to import diesel models into Singapore.

But before you race to the showroom, bear in mind that diesel models can cost as much as 25 per cent more than equivalent petrol models in Europe because turbo-diesel engines cost more to make.

Although you may be paying more in taxes and for the car, the savings in fuel costs and the good low-end torque from diesel power could offset this. Diesel also costs less than the cheapest grade of petrol.

Some observers say the tax cut tax may not be a very attractive deal. If the diesel engines have the same displacement, the savings won’t be much unless you drive long distances, at least 2,000km a month.

But if the size of the diesel engine is smaller, it will offset the special tax. It will then make economic sense since you get 25 to 30 per cent savings in fuel consumption.

Car enthusiasts who enjoy the higher torque of diesel-powered cars may find the revised road tax for Euro IV diesel-engine passenger cars attractive as it makes it cheaper for them to drive a car with improved acceleration.