The Barbados Labour Party has delivered an election campaign promise to abolish the road tax and replace it with a fuel tax effective July 1.
The fuel tax will be levied at a rate of 40 cents per litre of petrol, 40 cents per litre of diesel and five cents per litre of kerosene.
This represents a net increase on gas and diesel of 28 cents per litre.
Delivering her mini-Budget today, Prime Minister Mottley assured that the fuel tax would result in a reduction of the additional payments that resulted from the National Social Responsibility Levy (NSRL) that was levied to the tune of 12 cents per litre on gasoline and 11 cents per litre on diesel.
Mottley also said that the average motorist who was paying road tax of between $400 to $1,600 per year was unlikely to pay more under the new fuel tax.
She said Government expects the new tax to raise $80 million, an increase from the combined road tax, which only earned $65 million.
Meanwhile, motorists will still be required to register their vehicles.
As such, motorists will pay the sum of $400 for registration of new or second hand private vehicles while people purchasing commercial, new or second hand, will pay a registration fee of $1000.
Commercial vehicles will still be required to register on an annual basis but will now pay 50 per cent of the previous fees paid as road tax. This is expected to yield $5 million.