Any reduction in the petroleum levy is likely to depend on the government presenting an alternative revenue plan acceptable to the International Monetary Fund. The Petroleum Minister informed a Senate committee that the IMF may not support a levy reduction unless the resulting revenue loss is recovered from another source.
The government also defended the new market-linked fuel pricing mechanism, under which the Oil and Gas Regulatory Authority independently determines prices. Officials explained that petrol and diesel prices are linked to Singapore market benchmarks and that more frequent price revisions are intended to reduce the impact of sudden international price movements.
Lawmakers, however, questioned whether frequent revisions would increase uncertainty for consumers. From a fiscal perspective, the central issue remains unchanged: a reduction in petroleum taxes may offer immediate consumer relief, but it would also create a revenue gap that the government would need to fill through another tax, levy or expenditure adjustment.