Tag Archives: private pleasure craft

Joy in heaven

I tell you that even so there will be more joy in heaven over one sinner who repents, than over ninety-nine righteous people who need no repentance.

That’s from the Gospel according to St Wikipedia.

Revenue’s figures, though, suggest that most of us are compliant, with around 99 per cent of taxpayers willingly handing over what the State believes is due.

Assuming this is true, the best way that Revenue can ensure the habit continues is to continue enforcing the rules effectively. Not because this scares people into paying, but because it reassures the vast majority who do that those who do not stand a good chance of being caught.

That’s from the Cantillon column in the Irish Times of 5 January 2019.

And to think that, just over four years ago, Cantillon was arguing for the continuance of a tax scheme under which 99 per cent of taxpayers were evaders. We rejoice at his or her conversion to the paths of righteousness.

Give that columnist a 99, Agent 99.

 

Diesel

Now that the Department of Finance and the ISA have raised the white flag and abandoned the tax-evaders’ delight, the Mineral Oil Tax scheme for private pleasure craft, I thought I might rewrite my page on tax-dodging boat-owners. The version here is completely new.

Owners who wish to pay the tax in 2019 for 2018 will find information here. Private owners want Form PPN1; the link on that page still shows last year’s form but it may be possible to use it, changing the dates as appropriate. That’s what Revenue told me to do last year.

Better drowned than duffers

The Irish Sailing Association is at it again, lobbying for the retention of a system under which the vast majority of owners of diesel-powered private pleasure craft can safely engage in tax dodging.

The ISA folk don’t want you think about that part of it so, although they say that they hold “no brief for those who have not complied with the current arrangements”, they concentrate on all the disasters that will befall leisure sailing folk if they can’t buy cheap diesel. Apparently there will be outbreaks of scurvy, plagues of locusts and unwanted exercise if boaters can’t continue to buy subsidised fuel.

You can read it all here if you want a laugh, but Commander Walker’s immortal words come to mind:

BETTER DROWNED THAN DUFFERS IF NOT DUFFERS WON’T DROWN.

If owners of private pleasure craft are as nitwitted as the ISA say …

Leisure vessels would go to sea either overburdened with spare cans of fuel, or with insufficient reserves on board. Distress situations would arise and lives would be at risk.

… they will at least have the consolation of knowing they may be nominated for the Darwin Award. But I don’t believe they are, and I believe in the power of the free market: if seafaring yachties have to use white diesel, a supply will arise to meet the demand.

The ISA are asking us to ignore the elephant in the room: to treat as an incidental and minor side-effect the fact that (by my reckoning) 99.75% of those who should be paying tax are not doing do. That scale of tax-dodging means that the current scheme is a complete failure, indeed a farce. It would have been really nice if the ISA had used their accumulated brainpower to devise schemes whereby yachties (and other owners of diesel-powered private pleasure craft) would have to pay the full price for their fuel.

The ISA say …

The issue for leisure sailors is not the price of diesel but its availability.

… but the fact that (at a rough guess) only 0.25% of them have been paying the proper rate of tax for the past five years, even though all they have to do is to send a cheque to the Revenue Commissioners, strongly suggests to me that “leisure sailors” are keenly interested in the price and have few qualms about ripping off the state.

According to Practical Boat Owner 584 March 2015, one Harry Hermon, described as “chief executive of the RSA”, said:

The ISA’s role is to promote the sport and to protect the interests of Irish sailors, hence the ISA’s interest in this matter. It is not the ISA’s remit to regulate or to enforce regulation.

But what the ISA is doing goes well beyond the neutrality that that suggests: it is actively promoting and lobbying for the retention of a scheme that facilitates tax-dodging by boat-owners. The ISA’s stance might be slightly less irritating if their friend Cantillon in the Irish Times hadn’t been prating about an “honour system” for paying the requisite tax. In 2014 just 20 boat-owners paid the tax for 2013 [I have not yet got the figures for 2015, covering tax due for 2014], which suggests that honour is not to be relied upon.

You might think that the ISA would have an interest in the financial health of the state: after all, the taxpayers give them over one million euro a year. But perhaps, in the yachting world, it’s more blessed to receive than to give?

Background

The ISA are lobbying because the European Commission has taken an interest.

 

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.

 

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.

 

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.

 

 

 

 

A large green diseasel

According to the Sunday Business Post of 20 November 2011 (paywall),

There is growing momentum behind a proposal to abolish the use of a green dye in subsidised agricultural diesel because of its widespread abuse through diesel ‘washing’ facilities.

The Irish Road Haulage Association wants the Minister for Finance “to leave all diesel white in colour, but allow agricultural users like farmers and contractors to receive a rebate for the diesel they purchase for agricultural use.”

Were this proposal adopted, it would mean that owners of private pleasure craft would be relieved of the obligation to make an annual return of their propulsion fuel purchases to the Revenue Commissioners, a return that must be accompanied by a cheque for the difference between the low price they currently pay for green diesel and the full price for white diesel. As I an quite sure that all owners are making such returns, the IRHA proposal would not increase the cost of boat use and would remove the form-filling.

I am so confident that all owners of private pleasure craft pay in full that I have asked the Revenue Commissioners to tell me how much the owners paid in each of the last two years.

Note, by the way, that the SBP’s account is at odds with that in the Irish Times on 9 November 2011, which said:

THE GOVERNMENT has effectively ruled out a rebate system to farmers and other legitimate users of agricultural or marked diesel to combat fuel laundering.

No doubt much spinning is going on.