Here's what the restructing of diesel tax could mean for ComfortDelGro

It will have must pass on the tax reduction to drivers.

Minister Heng Swee Keat announced during the Budget 2017 the restructuring of diesel taxes from lump-sum tax, a special tax levied on diesel taxis and is payable annually, to usage-based tax which is based on the volume of diesel used. What does this mean for transport group ComfortDelGro?

According to OCBC Investment research, this $0.10/litre diesel duty will be levied on automotive diesel, impacting the taxi drivers. At the same time, the government has also announced that the annual special tax on diesel taxis will be reduced permanently by $850.

"In our view (this) will allow ComfortDelGro (CDG) to pass on some of these savings back to the taxi drivers to help the drivers partially or fully offset the increase in the diesel costs," OCBC noted.