Tag Archives: mineral oil tax

Green diesel: reasoned opinion [updated]

Some news on one of our favourite topics.

The European Commission has formally requested Ireland to amend its legislation to ensure that private pleasure boats 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, Ireland breaches EU law by allowing the use of marked fuel for the purposes of propelling private pleasure craft. As a consequence, private leisure boats can not only use fuel intended for fishing vessels, subject to a lower taxation, but also risk heavy penalties if they travel to another Member State and the ship is checked 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 Ireland to the EU’s Court of Justice.

European Commission press release dated 16 April 2014, about three quarters of the way down the page.

Update: I see that the Irish Examiner noticed the EC statement. And NESC believes (sensibly) that green diesel should be scrapped altogether. Which won’t happen, because if you didn’t have unnecessary or ridiculous regulations Irish politicians wouldn’t be able to pretend to be doing something useful by playing with them.


Mineral Oil Tax returns for 2013

I have been pointing out for many years that the Mineral Oil Tax is paid by only a tiny minority of Irish boat-owners, although it should be paid by all those who use rebated (green) diesel for propulsion of private pleasure craft. You can read my previous postings here, here, here and here, with information on how to pay, in 2014, the tax due for 2013 here.

Twelve months ago I gave the figures for the years 2009–2012.

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, an average of 6432.1 litres per return; I reckoned that much of that figure was accounted for by the hire fleets.

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

I now have the latest figures. In 2014, 20 boat-owners paid the tax for 2013. The amount received was €105,561.74 on 279,842.4  litres of diesel. This is the smallest number of returns since the idiotic tax was introduced.

I have suggested to the Revenue Commissioners that they should compare the reported total number of litres of diesel bought with the total sales reported by those Licensed Marked Fuel Traders who sell at marinas. The licensing system has been in operation since October 2012 so Revenue should be able to determine the total sales for 2013 and compare them with the reported purchases. The match is unlikely to be exact but the orders of magnitude would be interesting. If Revenue releases the figures to me I will report them here.


Join the elite while saving the nation

One of the most exclusive groups in Ireland is that of the boat-owners who pay Mineral Oil Tax on the diesel they use for private pleasure navigation. My own view is that, if you make payment of a tax effectively optional, most people won’t pay it. I have been providing supporting evidence for some time here, here, here and here, from which last I can say that there were 23 law-abiding boat-owners in Ireland last year (and 8816 boats registered on the Shannon, not to mention those based on other waters).

Clearly, this ridiculous system should be abolished: boats using diesel for private pleasure navigation should be forced to use non-marked fuel and pay the full non-rebated rate. Until that happy day comes, those who wish to join the respectable classes can download the return form for 2013 here [PDF]. Mineral Oil Tax on fuel used in 2013 is to be paid by 1 March 2014.

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.


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.

More on Mineral Oil Tax

I showed here that very few boat-owners paid the Mineral Oil Tax for 2009 (38) and 2010 (41). I now have the figures for 2011 (MOT paid by 1 March 2012) and I can report that there has been a very significant change, of 46%, in the numbers paying the tax.

Unfortunately the change was downwards, from 41 to 22. The Revenue Commissioners tell me that

[…] there were 22 returns received by 1 March 2012 for 2011, amounting to €53,398.58 MOT [Mineral Oil Tax] on 141,503.29 litres oil.

That’s an average of 6432.1 litres each, which is a lot; I suspect that much of the total came from the hire fleet, with less than twenty private owners making returns.

This ridiculous tax should be scrapped; those operating private pleasure craft should be required to use non-rebated diesel.



Tax-dodging boat-owners redivivus

In December I posted a piece suggesting that the amount of money received by the Revenue Commissioners in Mineral Oil Tax was far below what it should be. New readers may wish to know that, under an insane system introduced by the Irish government to give the impression of complying with a European Union ruling, owners of private pleasure-craft are allowed to buy cheap green (rebated) diesel (marked gas oil) but are supposed to pay to the Revenue the difference between the amount they paid at the pumps and the amount that would have been paid without the rebate. This difference is called Mineral Oil Tax.

Having discovered the total amount received by the Revenue, and deduced from that the number of litres on which the tax was paid, I wrote:

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 [for the year 2010] 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.

I later converted that post into a page, to give it more permanence. On that version, I added the suggestion that the inland hire fleet probably accounted for the vast majority of the diesel on which Mineral Oil Tax was paid. Note that the owner of a hire fleet would make a single return covering the entire fleet.

Some folk objected to my mentioning this matter at all; others suggested that I was wrong and that most boat-owners were undoubtedly law-abiding taxpayers. Accordingly, I asked the Revenue for the number of returns received in each of the two full years for which the scheme has operated. The response:

[…] the number of returns for 2009 (received in 2010) was 38 and for 2010 (received, near end of 2010 or in 2011), the figures was 41.

Most boat-owners have been dodging the tax. I rest my case.