Tag Archives: marked gas oil

Dear Irish Sailing Association …

On those grounds, the Court (Eighth Chamber) hereby:

Declares that, by not ensuring that the minimum levels of taxation applicable to motor fuels laid down by Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity were applied to gas oil used as fuel for propelling private pleasure craft, and by permitting the use of marked fuel for propelling private pleasure craft, even where that fuel is not subject to any exemption from, or reduction in, excise duty, Ireland has failed to fulfil its obligations under Articles 4 and 7 of Directive 2003/96 and Council Directive 95/60/EC of 27 November 1995 on fiscal marking of gas oils and kerosene respectively;

Orders Ireland to pay the costs.

Vilaras, Malenovský, Safjan

Delivered in open court in Luxembourg on 17 October 2018.

up yours.

Patriyachtism

It will be recalled that, for many years, the governments of the United Kingdom of Great Britain and Northern Ireland and of Ireland subsidised the owners of private pleasure craft by allowing them to use the cheap diesel permitted for off-road use (not that farmers should get subsidies either). The EU (or whatever it was called at the time) told them to stop; they asked for, and received, several derogations to allow them time to comply; during that time they stuck their thumbs in their collective bums and did nothing. Eventually the EU got fed up and told them to get on with it.

The Irish government’s pretence at compliance was particularly ludicrous and contemptible. It said that yacht-owners (using “yacht” as shorthand for “private pleasure craft”) could continue to buy marked gas-oil (cheap or green diesel) at the rebated (cheap) price but that, once a year, they should tell the Revenue Commissioners how much they had bought, work out the amount of the underpayment and pay that sum to the Revenue.

I can’t imagine how the Revenue Commissioners thought that was going to work, but they seem to have been happy with a scheme that facilitated — nay, encouraged — tax evasion by those sufficiently well off to own yachts. Someone in the Irish Times, perhaps after having had his or her ear bent over a few pink gins at the bar of the George, referred to this as an “honour system”; there was no evidence that she or he had actually checked the compliance rate to assess the effectiveness of the scheme and the extent of honour amongst yacht-owners.

The figures for the year 2015, as of 15 April 2016, were kindly supplied by the Revenue Commissioners some months ago; here they are, with those for previous years.

For the record:

Year Payers Litres Amount
2010 for 2009 38 n/a n/a
2011 for 2010 41 n/a n/a
2012 for 2011 22 141,503.29 €53,398.58
2013 for 2012 23 301,674 €113,841.45
2014 for 2013 20 279,842.4 €105,561.74
2015 for 2014 26 289,151 €108,934.80
2016 for 2015 18 371,666 €140,021.51

I suspect that the increase in the number of litres paid for might represent the improved business for the hire fleets in 2015, but I would welcome information on the subject.

In 2015 the Irish Sports Council gave the Irish Sailing Association €1,121,900.

 

Marked fuel

The European Commission is taking the UK government to court because it

… does not require fuel distributors to have two separate fuel tanks to distinguish between the lower tax marked fuel and the fuel subject to the standard rate.

As a result, owners of pleasure craft sometimes (poor dears) find themselves with no choice but to buy red diesel and they may not pay the right amount of tax, which is no doubt a cause of great sadness to them.

As I (and the Irish Examiner) reported some time ago, the Commission is also coming after Ireland’s ludicrous arrangement. Ireland was to respond to the Reasoned Opinion by 16 June 2014; the Revenue Commissioners have not told me how (or indeed whether) they responded.

 

 

Red diesel

[European Commission] May infringements package: main decisions

Reference: MEMO/13/470 Event Date: 30/05/2013

In its monthly package of infringement decisions, the European Commission is pursuing legal action against Member States for failing to comply properly with their obligations under EU law. These decisions covering many sectors aim at ensuring proper application of EU law for the benefit of citizens and businesses.

The Commission has taken today 143 decisions, including 15 reasoned opinions and 5 referrals to the European Union’s Court of Justice. Below is a summary of the main decisions. For more information on infringements procedure, see MEMO/12/12. […]

3. Reasoned opinions […]

Taxation: Commission requests United Kingdom to ensure private boats do not use lower taxed fuel

The European Commission has formally requested the United Kingdom to amend its legislation to ensure that private pleasure boats such as luxury yachts can no longer buy lower taxed fuel intended for fishing boats. Under EU rules on fiscal marking for fuels, fuel that can benefit from a reduced tax rate has to be marked by coloured dye. Fishing vessels for example are allowed to benefit from fuel subject to a lower tax rate but private boats must use fuel subject to a standard rate.

Currently the UK law does not impose fuel distributors to have two separate fuel tanks, one with marked fuel subject to a lower tax rate and the other with regular fuel subject to a standard tax rate. As a consequence, private leisure boats can not only use fuel intended for fishing vessels but also risk heavy penalties if they travel to another Member State and the ship is controlled by the local authorities.

The Commission’s request takes the form of a reasoned opinion. In the absence of a satisfactory response within two months, the Commission may refer the United Kingdom to the EU’s Court of Justice.

(for more information: E. Traynor – Tel. +32 229 21548 – Mobile +32 498 98 3871)

h/t Michael Clarke

A call to patriotic action …

… said Brian Lenihan of his 2009 Budget, which did not greatly impress Michael Hennigan of FinFacts, who had a highly entertaining, if sadly prescient, article here.

 […] political self-interest, incompetence, negligence and laziness […] litany of failure, smugness, hubris and neglect […] the incompetence of the toxic cocktail of former school teachers, small town solicitors, social workers and bookkeepers […]

How true those words are, even today. (The “toxic cocktail” was the membership of the government.)

Anyway, on 24 April I heard Josephine Feehily of the Revenue Commissioners saying on the wireless that the minimum rate of compliance for self-assessed taxes was 80%. I fear that she may not have taken account of the Mineral Oil Tax, which has been largely ignored by the citizenry.

Just to recap, this idiotic tax is the result of governmental cowardice and unwillingness to tell even a small, insignificant interest group to get stuffed. For historical reasons, owners of diesel-powered boats, in some countries, were allowed to use rebated (“red” or “green” low-tax) diesel, AKA marked gas oil. The EU said, many years ago, that this subsidy should no longer be given to owners of private pleasure craft. The governments concerned accepted that, but asked for time to introduce the change. When that period ran out, without their having done anything about it, they asked for a further deferral, and then yet another. The EU finally got fed up and told them to get on with it.

The Irish government, with that low cunning and contempt for the law that has so endeared us to other EU states, decided to reject the obvious method of implementing the new rule, which would have been to charge owners of private pleasure craft the full (non-rebated) price at the pump. Instead, it came up with a scheme that had no chance of working properly: it allowed owners of private pleasure craft to continue to buy diesel at the low price provided that they made returns, once a year, showing the amount of diesel they had bought and paying the difference between the rebated price and the full price. This difference is called the Mineral Oil Tax [PDF].

Such a scheme might have had a chance of working in Switzerland or Germany, places where citizens often obey the law even when nobody is looking, but it had no chance at all in Ireland. And so indeed it proved to be.

In 2010, 38 boat-owners paid the tax for 2009.

In 2011, 41 boat-owners paid the tax for 2010.

In 2012, 22 boat-owners paid the tax for 2011. The total amount received was €53,398.58 on 141,503.29 litres of diesel. That’s an average of 6432.1 litres per return, which is very high; I think that a lot of that is accounted for by the hire fleets.

I now have the latest figures.

In 2013, 23 boat-owners paid the tax for 2012. The total amount received was €113,841.45 on 301,674 litres of diesel.

It is gratifying to note that the number of returns has increased, even if it is still a tiny proportion of the total number of owners of diesel-powered private pleasure craft. But the increase in the amount received and in the number of litres returned is staggering: both figures have more than doubled. I am unable to explain the increase.

As I said last year, this ridiculous tax should be scrapped; those operating private pleasure craft should be required to use non-rebated diesel. Taxes that cannot be collected bring the whole system into disrepute and strengthen citizen contempt for the state and for society. In taxation, you’ve got to grab them by the balls; then their hearts and minds will follow. That’s why VAT and PAYE are so effective.

 

Shannon Leisure Development Co Ltd

No, me neither, but it seems to mean CarrickCraft, which now has Marked Fuel Trader’s Licences for its bases at Banagher and Carrick-on-Shannon, thus swelling the host of the elect.

IBRA and fuel supply

I asked IBRA about the absence of its members from Revenue’s list of holders of Marked Fuel Trader’s Licences. I was surprised by the absence as I believe IBRA members to be compliant with Revenue demands; for example, they (and I) are amongst the few making Mineral Oil Tax returns.

I am happy to say that IBRA members have registered for the new licence and are compliant with the requirements, but it seems that the Revenue lists are not up to date. That raises the possibility that other waterways-based traders have been omitted; if that is so, I would be glad to hear of them.

The diesel monopoly

I wrote here about the Revenue Commissioners’ new Marked Fuel Trader’s Licence. In brief, anyone selling marked fuel oil [green diesel] has to pay €250 to get a Marked Fuel Trader’s Licence and must also make monthly returns to Revenue of all “oil movements”. I thought, but I wasn’t sure, that this applied to marinas and others selling fuel for private pleasure navigation; as far as I could see at the time, none of those selling fuel along the Irish inland waterways had registered.

I have two pieces of news about that.

First, the Revenue Commissioners have confirmed that the new scheme does apply to sales of marked fuel for private pleasure navigation: in other words, those selling green diesel for boats along the inland waterways should all be registered under the scheme.

Second, I am happy to say that there is now at least one registered seller: Ciaran Fallon of Rooskey Craft & Tackle at Rooskey Quay. (There may be others that I haven’t spotted; you can check the latest list of Licensed Marked Fuel Traders here.) For the moment, then, Rooskey Craft & Tackle seems to have a monopoly of the legal supply of marked fuel on the Irish inland waterways.

Finally, on a somewhat related matter, here is the form [PDF] for making mineral oil tax returns for 2012. The numbers of returns received so far have been 38 in 2009, 41 in 2010 and 22 in 2011.

Subsidising boat-owners

I wrote here about the method that the Revenue Commissioners employed to implement new rules on the rate of duty to be paid on diesel used for private pleasure navigation.

For reasons best known to themselves, Irish governments allow farmers to use cheap (“rebated”) diesel in their tractors, on the grounds that the tractors are for off-road use. And for many years boat-owners with diesel engines were allowed to use the same cheap diesel. The same arrangement applied in the UK and in Belgium. The diesel (“marked gas oil”) was coloured, latterly red in the UK and green in Ireland.

The EU decided some time ago that the rules should be standardised throughout Europe and that boats used for private pleasure navigation should not be allowed to use the subsidised fuel. The UK and Ireland sought and received successive derogations allowing them to delay the introduction, allegedly so that they could make appropriate arrangements. The governments did nothing about it. Accordingly, when the European Commission got fed up and told them there would be no more derogations, they had no plans ready and were faced by well-organised gangs of well-to-do boat-owners anxious to continue enjoying their subsidy.

The Irish authorities decided that boat-owners could continue to buy the marked gas oil, at the rebated rate, but that they would have to make a return to the Revenue Commissioners at the end of each year, showing how much diesel they had bought and how much Mineral Oil Tax they were paying to make up the difference. The December 2011 version of the document and forms is here (PDF). Mineral Oil Tax is intended to cover “the difference between the auto diesel and marked gas oil rates at the time of purchase of the oil”.

I asked the Revenue Commissioners how much they had taken in from boat-owners in 2009 and 2010. They said that they got  €169,895.51  in 2009 and  €140,929.12  in 2010.

For most of 2010, the rate of Mineral Oil Tax was  €449.18 per 1,000 litres  (it was slightly higher from 8 to 31 December 2010, a period when there would have been little pleasure-boating). That means that duty was paid on 313,748 litres of diesel.

So how effective is this system? On what proportion of sales for private pleasure navigation is the tax being collected? Revenue has no idea  and has no way of getting any idea because

Mineral Oil Tax on marked gas oil (MGO) is collected at the point of release for consumption from tax warehouse or upon importation to the State and, for the vast bulk of MGO, no information is available at that stage as to the ultimate destination or use of the oil, as most of it goes through a distribution network before it reaches the final consumer.

So let’s see if we can help to provide a rough estimate. According to the RNLI

A diesel engine burns about 1 gallon per hour for every 20hp. So a 90hp diesel would use about 90/20 = 4.5 gallons of fuel per hour. For those who prefer to work in litres then simply multiply the horsepower by 2 and then divide by 9. So a 90hp has an estimated consumption of 2 x 90/9 = 20l/hour.

Let us suppose, for the sake of argument, that the average pleasure craft has a 40hp diesel engine (which is what my 1960s cruiser had). That would use two gallons or nine litres per hour. So the  313,748 litres of diesel on which Mineral Oil tax was paid would have kept one cruiser going for 34,861 hours.

On the other hand, if there are 10,000 pleasure craft in Ireland, with diesel engines averaging 40hp, then they are claiming to have cruised for an average of three and a half hours each in the whole of the year 2010.

I suspect therefore that there is significant underpayment of the Mineral Oil tax and I suggest that the system should be abolished: boat-owners should pay the full (auto diesel) price.