(Reprinted from HKCER Letters, vol.25, March-July 1994)
A Rejoinder to Vehicular Emissions in Hong Kong: Facts and Policy Analysis
Frank Rusco and David Walls
The duty differential between unleaded and leaded petrol has in fact increased since the adoption of unleaded petrol in April 1991; we thank Mr. Ng for his efforts in bringing this erratum to the attention of the readership of the HKCER Letters. However, the relevant quantity is not the differential between the duties on unleaded and leaded petrol but rather the difference between their respective prices inclusive of duties. This quantity fell from $1.01 in April 1991 to $0.34 in July 1993. This event is of paramount importance if the government's goal is the adoption of unleaded petrol.
Mr. Ng's claims pertaining to our empirical results are undocumented; thus, we are unable to comment on them. We do note the most salient discrepancy: Our results have been published and discussed in a public forum.
Finally, we would like to illuminate the nonsequitur in the overnment's pollution control strategy: Mr. Ng states that public transport operators use "highly polluting diesel technology" due to the low duty on diesel fuel. If this were true -- and we do not dispute this claim -- then why does the Environmental Protection Department insist upon banning diesel engines for certain classes of users instead of simply adjusting the duty? After all, it seems silly for one branch of government to subsidize diesel fuel while another branch outlaws it.