UK red diesel reversal worries boaters, industry associations
By IBI Magazine
Last week's rejection by the European Commission of the UK government's application to renew that country's derogation on red diesel for recreational boaters has met with an outcry among industry associations, charter companies and even some members of Parliament. As of January 1, 2007, all diesel used for private boating purposes is likely to be taxable at the same rate as road diesel. The ruling will effectively double the existing price of red diesel to around £1 per litre. The EC did, however, leave an option for creating a separate tax rate for marine leisure fuel that would create a hike in diesel prices, but not a doubling. The European Commission has also rejected similar applications from Belgium and Malta. The British Marine Federation's executive director Howard Pridding told Motor Boat & Yachting magazine that the decision "will have a huge adverse impact on the UK marine industry." Local media near the popular cruising destination, the Broads, also said that the ruling could "deal a blow" to the charter industry there. Ken Gaylard, chairman of the Broads Hire Boat Federation, told the website EDP24 that the decision could ultimately erode profits or increase the cost of holidays. Gaylard said that his group would also be looking at whether boatyards could claim exemptions as commercial operators. However, Jamie Campbell, vice-chairman of the Broads Tourism Forum, felt the impact would be less significant, saying the cost of diesel was a tiny part of the cost of owning a motor cruiser. The diesel application rejection also drew swift and sharp reactions in the House of Commons. Financial Secretary John Healey told the House of Commons in a heated exchange with Northern Isles MP Alistair Carmichael about the rejection. Carmichael has been been active for years in trying to ensure the subsidies on diesel remained. The chairman of the Shetland Marinas, Piers and Boating Clubs Association (SMPBCA), Bobby Hunter, said the change meant yet another tax on people living in rural Britain. "In a community where boats are an integral part of society, it is yet another tax being put on us from a government that really doesn't think too much about rural and remote communities," he told the Shetland Marine News. Carmichael had told Healey that the fight for keeping red diesel might not have been lost had the secretary more "backbone". Healey told the Commons that he was well aware that the derogation permitting the use of red diesel in Britain is highly valued by private boat owners and users. "We put the strongest possible case to the Commission. We prepared that case in close cooperation and with contributions from many of the organisations affected. We could have done little more to press the case," he said. "I spoke personally with the Commissioner and have written personally to the Commission on this issue. There is no further stage in this process now." Carmichael continued: "Private boat users have been 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." But all news media noted that the impact of the ruling will probably not take place immediately. Some believed that prices may not go up at least until June.
(11 December 2006)
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