Red diesel

[bottle]

It occurs to me that we will all have to start companies, so that all boats would be comercial.

 

And get a commercial license, not economically sound I think.

[fender.]

Red diesel will affect a lot of communities (not just liveaboards!) and there are huge communitiies that rely on red diesel for fuel as their boats are the only way of ensuring food and supplies in the Scottish Islands. See http://www.shetlandmarine.com/2006/06%20Le...esel_rights.htm

 

As the article shows the govenrment hasnt been that forthcoming about its 'fight' to retain derogation. Time for boaters to really show up the governments lackisidal attitude on all these things because so many small but important businesses will be affected. It is time to protest not only about DEFRA but about the EU too.

 

Another article just published ( http://new.edp24.co.uk/content/news/story....3A10%3A43%3A093 ) details the issues facing the broads, and also suggests that it wil be June before changes actually occur. So we've got SIX months to kick up a fuss!

 

"Private boat users have been both the victim of New Labour prejudices. They clearly thought that they were dealing with a few rich people on their gin palaces. The opposite is true. This change will serve to exclude many people on low incomes from enjoying boat use."

Edited December 8, 2006 by fender.

[miles beyond]

Being that a live aboard boater pays for a BW Pleasure Boat Licence, use of diesel for propulsion will be considered recreational.

 

This is the area that I think could be most open to challenge. Although BW issue live aboards with a Pleasure Boat Licence in most instances, that is merely BW's terminology and carries no strict legal definition. The hardest hit if diesel were to be taxed at the same rate as road diesel (which is by no means certain) would be those who live on the canal moving around and "off the grid", for in most cases their ability to generate power means they are reliant on their engine or a generator (which, even if it is built in and has a separate tank, will not in practical terms be able to be fuelled by "red" diesel due to lack of easy availability). For many the fuel use for power generation may well equal or exceed any that is used in propulsion. Therefore such live aboards will be paying a disproportionately high rate of tax for light, and possibly heat, compared to a house dweller. That may well be a human rights issue.

[anhar]

This is the area that I think could be most open to challenge. Although BW issue live aboards with a Pleasure Boat Licence in most instances, that is merely BW's terminology and carries no strict legal definition. The hardest hit if diesel were to be taxed at the same rate as road diesel (which is by no means certain) would be those who live on the canal moving around and "off the grid", for in most cases their ability to generate power means they are reliant on their engine or a generator (which, even if it is built in and has a separate tank, will not in practical terms be able to be fuelled by "red" diesel due to lack of easy availability). For many the fuel use for power generation may well equal or exceed any that is used in propulsion. Therefore such live aboards will be paying a disproportionately high rate of tax for light, and possibly heat, compared to a house dweller. That may well be a human rights issue.

Although there may be a case for lower priced fuel when used exclusively for heating and generating, I could never really see much case for it in leisure boating as a means of propulsion. Since it is impossible, or at best impracticable, to distinguish whether a canal boater is taking on fuel for heating/generating or engine propulsion, then it all has to be treated the same. That is, all red and cheap, as now, or all white and dearer as looks like will happen with this news. As many have pointed out, almost no boatyard in practice is going to bother to supply both fuels if the cheap red is abolished for engine use, even if it is permitted to be retained for heating/generating. It's going to be white only.

 

I've read the arguments in favour of lower duty red for boats but to me, they never made a lot of sense other than from a purely selfish view that, yes of course I'd like to continue having cheaper fuel for my boat, who wouldn't? But intellectually it really is hard to see why what is purely a pleasure activity for most should use a lower taxed fuel that was, I understand, intended originally to subsidise farmers. I'm not sure I agree that farmers should be subsidised either but at least I can see the arguments in favour of it. But boaters? A luxury pastime that most could never afford. Why?

 

Also, tales of canal boating being severely reduced to the point of near extinction if we have to pay road prices for diesel are wildly exaggerated in my view. My guess is that it won't make much difference. Almost all of us will just swallow it just like we have to take all the other rapidly rising prices of canal boating such as mooring fees etc. Peoples' love of the activity is pretty inelastic but boaters had better budget for total costs rises of 10%pa minimum in my view, which doubles costs in seven years, a point which those contemplating becoming liveaboards need to think seriously about before committing.

 

regards

Steve

[tburgess]

Think it will have an effect on new and used boat prices?

 

Trevor.

[alan_fincher]

It occurs to me that we will all have to start companies, so that all boats would be comercial.

 

 

And get a commercial license, not economically sound I think.

 

Actually, maybe not.......

 

If you have a trading craft used as a shop, store or workshop, then the basic licence price is indeed massively higher than a private canals and rivers cruising licence.

 

But, it seems if your business turnover is less than £45K per annum, you can get a 56% discount on the business licence.

 

For a nominal 50' boat, (14.5 to 15.5 metres), the "normal licence" is £567 (or £510 for prompt payment). Equivalent discounted business ones are (my calculations) about £615 (or £553 for prompt payment).

 

So less than £50 p/a difference.

 

It has been suggested elsewhere that the canals will shortly be swamped by "trading" boats offering Rosie & Jim puppets to canalside purchasers.

 

On the face of it, if you expect the difference between red and white diesel to cost you more than £50 per year, it might just be worth going into the rag-doll business! (You can always stop if you find you are about to sell £45,000 worth in any one year!).

 

(I'm sure it aint as easy as that though )

Edited December 8, 2006 by alan_fincher

[Chertsey]

Good thinking fuzzyduck, KISS in practice. The Gov could do this if they truly wanted to. Knock of the rebated tax and add the (EU approved) leisure rate, leave the fuel red. This would be better for the boater(less stealing, which will be more commonplace with white), better for fuel sellers and better for customs. The Gov would get more revenue for no outlay and also satisfy the EU.

 

All thats needed is an additional tax rate(such as increased VAT) for private boaters to be levied at the pump.

 

Is it me or would this be a bit too simple?

 

Isn't this more or less what happened with VAT on domsetic fuel a few years back? It's levied at the EU minimum of, I think, 5 percent rather than 17.5. But there was an almighty outcry about that which probably forced the government's hand. I doubt whether we have so much clout.

 

Re fuel for heating, this might be a stupid suggestion, but is it the same stuff used in oil-fired agas in people's houses? If so then presumably it's directly comparable for duty purposes and there are companies with tankers who will deliver it to you. But I bet it's not the same stuff ...

[miles beyond]

I've read the arguments in favour of lower duty red for boats but to me, they never made a lot of sense other than from a purely selfish view that, yes of course I'd like to continue having cheaper fuel for my boat, who wouldn't? But intellectually it really is hard to see why what is purely a pleasure activity for most should use a lower taxed fuel that was, I understand, intended originally to subsidise farmers. I'm not sure I agree that farmers should be subsidised either but at least I can see the arguments in favour of it. But boaters? A luxury pastime that most could never afford. Why?

 

But it is not a luxury pastime for many liveaboards - it is for some a choice of lifestyle (which is far greener than living in most houses) and for other, younger people in many cases, it is a property option against unaffordable housing (particularly in the South) and/or astronomical rents. The housing problem in the UK is exceptional compared to other EU states - in rural France a house is cheaper than many canal boats. Why should live aboards pay a far higher rate of tax for heat and light, which will be an unavoidable consequence of this change. And I do think this may be possible to challenge legally. Certainly expert advice should be sought by boating organisations.

 

It is impossible to accurately forecast the longer term effects of this change in fuel duty, but what persuaded the Treasury to present a case to the Commission was the economic argument - the risk to small businesses, consequent job losses etc. So your view is a bit blinkered and does not take on board the possible macro-economic effect.

 

Would you argue for full duty to be levied on aircraft fuel? There is a far stronger case to be made for that, but it could be politically far more sensitive to address.

[Alastair]

Isn't this more or less what happened with VAT on domsetic fuel a few years back? It's levied at the EU minimum of, I think, 5 percent rather than 17.5. But there was an almighty outcry about that which probably forced the government's hand. I doubt whether we have so much clout.

 

Re fuel for heating, this might be a stupid suggestion, but is it the same stuff used in oil-fired agas in people's houses? If so then presumably it's directly comparable for duty purposes and there are companies with tankers who will deliver it to you. But I bet it's not the same stuff ...

You can get red diesel (35sec) or heating oil/kero (28sec) delivered to most places, you just need to find a supplier who delivers to farms. In Yorkshire, BATA or Crown Oils will deliver.

 

We moor across a field, so the lorry can't get directly to us. So I have a 1000l tank on a trailer and get a delivery to that. The trailer's tyres aren't up to the weight, so I end up carrying the oil across the field in drums, but that's another story.

 

 

We are lucky - the engine bay is big enough to easily add a 1000l 2nd tank. This we will do, and use this for heating. The current 350l main tank will be for engine fuel, which will have to be the white stuff. We don't use much fuel, tho' as we don't go anywhere very often. On long trips, we'll used the excise-free mast and sails

[doh]

Hi,

Yes, Rat no.1 here...Licence increase, fuel increase, and now, having just received our mooring increase notification I think i can safely say, bugger it...time to get off. After 25 years boating (a way of life) i think this is the straw that will break the camels back. 1 boat going up for sale in the very near future. The poor might inherit the earth, but not the canals. They are getting to be out of our league anyway.

[sbillis]

Hi,

Yes, Rat no.1 here...Licence increase, fuel increase, and now, having just received our mooring increase notification I think i can safely say, bugger it...time to get off. After 25 years boating (a way of life) i think this is the straw that will break the camels back. 1 boat going up for sale in the very near future. The poor might inherit the earth, but not the canals. They are getting to be out of our league anyway.

 

To quote the Duke of Wellington. " There are few things in life which are as good or as bad as they first seem. "

 

Simon

nb Bulrush

[Djuwenda]

Although there may be a case for lower priced fuel when used exclusively for heating and generating, I could never really see much case for it in leisure boating as a means of propulsion. Since it is impossible, or at best impracticable, to distinguish whether a canal boater is taking on fuel for heating/generating or engine propulsion, then it all has to be treated the same. That is, all red and cheap, as now, or all white and dearer as looks like will happen with this news. As many have pointed out, almost no boatyard in practice is going to bother to supply both fuels if the cheap red is abolished for engine use, even if it is permitted to be retained for heating/generating. It's going to be white only.

 

I've read the arguments in favour of lower duty red for boats but to me, they never made a lot of sense other than from a purely selfish view that, yes of course I'd like to continue having cheaper fuel for my boat, who wouldn't? But intellectually it really is hard to see why what is purely a pleasure activity for most should use a lower taxed fuel that was, I understand, intended originally to subsidise farmers. I'm not sure I agree that farmers should be subsidised either but at least I can see the arguments in favour of it. But boaters? A luxury pastime that most could never afford. Why?

 

Also, tales of canal boating being severely reduced to the point of near extinction if we have to pay road prices for diesel are wildly exaggerated in my view. My guess is that it won't make much difference. Almost all of us will just swallow it just like we have to take all the other rapidly rising prices of canal boating such as mooring fees etc. Peoples' love of the activity is pretty inelastic but boaters had better budget for total costs rises of 10%pa minimum in my view, which doubles costs in seven years, a point which those contemplating becoming liveaboards need to think seriously about before committing.

 

regards

Steve

 

sorry for the long cut and pastye, but you pretty much put my views into words on this one.

 

I am a liveabord on a cheap boat so dont necessarily agree with the "luxury past time definition", but I dont really think the canal has a vocation as cheaper first step onto the property ladder by definition either.

[Richard Fairhurst]

Since it is impossible, or at best impracticable, to distinguish whether a canal boater is taking on fuel for heating/generating or engine propulsion

Sorry, I don't follow you. My heating diesel goes in at one end of the boat. My propulsion diesel goes in at the other. One of them is a tank connected to the stove, the other a tank connected to the engine.

 

I've read the arguments in favour of lower duty red for boats but to me, they never made a lot of sense other than from a purely selfish view that, yes of course I'd like to continue having cheaper fuel for my boat, who wouldn't? But intellectually it really is hard to see why what is purely a pleasure activity for most should use a lower taxed fuel

Because the tax on white diesel (and petrol) is the nearest to a hypothecated tax we have.

 

Petrol/white diesel taxes (very very roughly speaking) pay for the upkeep of the roads. No it's not a direct correlation, but if the EU suddenly ruled that it was illegal to put tax on any fuel whatsoever, you can bet the UK government would instantly increase the road fund licence (='road tax') to compensate.

 

Also, tales of canal boating being severely reduced to the point of near extinction if we have to pay road prices for diesel are wildly exaggerated in my view.

I'm with you there, though I'm sure it will make some difference. My main concern is that it'll penalise the people with £20,000 boats who cruise lots of the system, but not have much effect on those who have a £150,000 shiny boat which rarely ventures out of the marina. The diversity of the waterways is to be cherished, and this is another nail in its coffin.

[Mick and Pauline]

I think this is the main point that we have all neglected (except Yoda, of course).

 

Red diesel may not disappear - the cessation of derogation only means that the tax levied has to be brought into line with EU levels - it does not mean that there will/should be a complete ban on the use of red diesel.

 

It would be a sensible approach to increase the taxation on the fuel, and those that can prove they are using quantities for heating can claim the tax back (or not pay it in the first instance).

 

It has been previously mentioned that many vintage engines will find it difficult or impossible to run on white diesel - this alone would have a drastic impact if red were taken off the market altogether.

 

Hi Neil,

I agree, this would be the best way forward.

Retain the present red diesel supply chain and increase the UK tax to the level required by the EU rules. This would keep the cost increase to a minimum. The red diesel suppliers and retailers could continue producing and sell the fuel as now, the commercial and heating user can then claim back the additional tax yearly or every six months, the vintage engine user can keep their fuel readily available along the waterways. It would prevent boat owners buying white diesel in Jerry Cans from supermarkets and all the risks in that.

 

This I think would be acceptable to HM Customs because to stop red diesel use on boats and still have it available for boat heating and commercial use is going to give them a lot more work in tax evasion. They already have a task force working on this just for the motor vehicles and to add boats to this would cause a lot more expense for them.

 

I don't think HM Customs would want to set on more Customs officers to stand at canal locks doing spot checks on boat engine tanks looking for red diesel or watching a hire boat bases for private boats filling up their engine tanks. Should this happen and red diesel was found, you would be prosecuted, you could loose your boat and the supplier where you got the red diesel from would be stood with you in the dock (not the wet kind).

To have boats running on Derv tax levels would all so increase the use of dummy tanks eg a small tube inside the main tank with a small amount of Derv in it for dipping and Customs sampling, the rest of the engine tank in red diesel fed from the small heating tank. These are already things that HM Customs officer are faced with in the vehicle tax evasion.

 

So I am for keeping the red diesel system as is, increase the tax to comply with EU and the lower tax user claims back the excess tax.

 

M&P.

[Neil@CanalVoyagers]

Another point to add to the argument:

 

Red Diesel accounts for about 25% of the yield of a barrel of crude oil, the second largest "cut" after gasoline (petrol).

 

Supply/demand anyone?

Edited December 8, 2006 by Neil@CanalVoyagers

[Richard Fairhurst]

I think this is the main point that we have all neglected (except Yoda, of course).

 

Red diesel may not disappear - the cessation of derogation only means that the tax levied has to be brought into line with EU levels

 

Unless I've misunderstood, the tax levied has to be brought into line with other UK levels, not with EU levels.

 

The relevant text is Council Directive 2003/96/EU:

 

Article 5

 

Provided that they respect the minimum levels of taxation prescribed by this Directive and that they are compatible with Community law, differentiated rates of taxation may be applied by Member States, under fiscal control, in the following cases:

 

- when the differentiated rates are directly linked to product quality;

 

- when the differentiated rates depend on quantitative consumption levels for electricity and energy products used for heating purposes;

 

- for the following uses: local public passenger transport (including taxis), waste collection, armed forces and public administration, disabled people, ambulances;

 

- between business and non-business use, for energy products and electricity referred to in Articles 9 and 10.

 

i.e. the UK is only allowed to charge differing rates for diesel where justified by the above four points (except where a derogation applies). Private pleasure craft don't qualify as any of the four unless you maintain that red diesel is significantly lower quality.

 

The Directive also seems to imply that hire craft will be subject to the full rate, too ('"private pleasure craft" shall mean any craft used by its owner or the natural or legal person who enjoys its use either through hire or through any other means').

 

But I may have misunderstood - it's not exactly the clearest English and I'm no lawyer.

[Neil@CanalVoyagers]

Hi Richard,

 

Luckily, I still work for the legal team at Cadburys - just run it past some of the lawyers here.

 

They seem to like the fact that 'may be' appears in the middle of the sentence - always means it can be argued in a court of law.

 

I'd be interested to read the rest of the directive - I'll try and get hold of it this evening to pick through - do you have a link/copy?

[Richard Fairhurst]

http://www.managenergy.net/products/R538.htm

 

(In case you're having difficulty sleeping...)

[dor]

A similar situatoin has recently arisen in theanimal feed industry that might be of interest.

 

A couple of years ago, the EU passed a Resolution saying that animal feeds had to list not just the ingredients in descending order (as for human food) but also give the actual percentages.

 

With fears about intellectual property being given away, a few compounders mounted a legal challenge, which was tacitly supported by the UK govenrment. As a result of this, the implementation of the resolution had to be put on hold. Although it has now just been implemented, but with a very tongue-in-cheek interpretation, it was delayed for over two years and the govenrment (through its Food Standards Agency) is not taking much interest in policing it.

 

IF the government really is against the loss of derogation, it could do all sorts of things to delay the introduction. When it does finally get implemented, it stil doesn't mean that our boating diesel has to be the smae price as road DERV, just be taxed at the minimum rate.

[Richard Fairhurst]

I refer the Honourable Gentleman to the posting above. As I read it (and I may be wrong), it does need to be taxed at road rates. See the Article 5 excerpt.

[fender.]

I dont think any of you have actually said how it will decimate the canal system. There's been the DEFRA, this, mooring increases, a potential backlog of maintenance is about to build up, and today Illyd Harrington (former IWA chairman) has voiced his concerns at what is happening to the canals. This government build crap millenum domes, send our troops to Iraq (and 'murders' them in the process), allows council tax to increase exhorbitantly, and sends inspectors into homes to find excuses for increasing council tax further. Its an expesnive, expensive, expensive government with priorites that are at best anally retentive.

[Guest]

I dont think any of you have actually said how it will decimate the canal system. There's been the DEFRA, this, mooring increases, a potential backlog of maintenance is about to build up, and today Illyd Harrington (former IWA chairman) has voiced his concerns at what is happening to the canals. This government build crap millenum domes, send our troops to Iraq (and 'murders' them in the process), allows council tax to increase exhorbitantly, and sends inspectors into homes to find excuses for increasing council tax further. Its an expesnive, expensive, expensive government with priorites that are at best anally retentive.

Well put. The cruel irony is that (unlike new labour) I am a socialist.

[Mick and Pauline]

Unless I've misunderstood, the tax levied has to be brought into line with other UK levels, not with EU levels.

 

The relevant text is Council Directive 2003/96/EU:

i.e. the UK is only allowed to charge differing rates for diesel where justified by the above four points (except where a derogation applies). Private pleasure craft don't qualify as any of the four unless you maintain that red diesel is significantly lower quality.

 

The Directive also seems to imply that hire craft will be subject to the full rate, too ('"private pleasure craft" shall mean any craft used by its owner or the natural or legal person who enjoys its use either through hire or through any other means').

 

But I may have misunderstood - it's not exactly the clearest English and I'm no lawyer.

 

Hi Richard,

 

I think the key to Article Five is in the opening statement and the first sentence :-

 

QUOTE

Article 5

 

Provided that they respect the minimum levels of taxation prescribed by this Directive and that they are compatible with Community law, differentiated rates of taxation may be applied by Member States, under fiscal control, in the following cases:

 

- when the differentiated rates are directly linked to product quality;

 

The UK have to respect the minimum levels of taxation prescribed by the Directive, this means that the UK do not have to apply the same UK Derv tax to red diesel, that is if red diesel is retained for pleasure craft use. The UK needs to raise red diesel to the EU minimum level and not necessary to the Derv level. I think Derv is taxed in the UK at a higher rate than some other EU countries for congestion and environmental reasons.

 

The other point in Article 5 is the product quality issue because red diesel is a lot different in the quality and the costs involved to make it. The Derv diesel blend uses higher quality, higher priced components to produce a low density (0.8) and low sulphur (10 ppm) fuel. On the other hand the red diesel blend uses a lower quality, lower priced components to produce a higher density (0.87) and higher sulphur (1000 ppm) fuel. So the two product qualities are quite different.

[Yoda]

Just to remind all that the increase is 40 pence per litre.

[Keeping Up]

Just to remind all that the increase is 40 pence per litre.

And I use up to 1500 litres a year, that's £600. Nearly enough for a pint of beer every day. I think I'll have to stay moored up outside the pub for longer.

 

Allan.