What does the EU decision mean for the average boat owner?
Today’s announcement that the EU has decided not to renew our derogation on red diesel for use by private pleasure boats is one motorboat owners have dreaded, but what will it mean in real terms?
From 1 January 2007, each litre of fuel used for leisure has to carry the minimum rate of EU duty of 21p. Fishermen and other commercial users will continue to use red diesel at its existing tax of 6.44p.
Fears for the industry
As the UK has no provision for a new 21p/lt rate on diesel (nor a colour for it) the fears are that boats will have to use full-tax (just under 49p/lt – it’s just gone up) white diesel, as happens in most European countries. This will create all sorts of policing problems for the revenue, and supply problems for the distributors. The marine industry fears that UK boatbuilding industry, and the re-sale market for diesel powerboats will be badly hit.
However, the good news is that the UK government is very aware of the potential for lost revenue from this thriving market, and will probably be slow to react. When they do work out the maths, it may be that they will find a compromise. There are plenty of theories, such as the continued use of red diesel by all UK boats, but with leisure users paying a slightly higher rate at the pumps (commercial boats would carry exemption certificates).
Who is hardest hit?
So how bad is this news? PBO recently ran a ‘worse case scenario’ in our feature Seeing Red (see PBO 478), or click here to download a PDF . We produced an interesting comparison table based on an average season of 50 engine hours. Depending on the size of boat and its horsepower, the increased duty was between £90 a year for a displacement motorboat with a 50hp engine, up to £4,050 a year for a twin-screw planing boat with a pair of 480hp Caterpillar diesels.
Worst hit, perhaps, are the people who can least afford road prices – the thousands of pensioners who are cruising the UK’s waterways in liveaboard narrow boats. Red diesel is used for everything from heating and cooking to producing electricity, and the average bills would rise by over £300 a year.
All we can do now is wait to see what the UK government will do. Hopefully they will take a leaf out of Norway’s book. This non-EU country recently decided to throw out proposed increases in marine fuel duty, and the latest issue of Batliv magazine shows triumphant boaters waving clenched fists of victory. We doubt that will happen – our government tend to do as they are told by Europe – but they may well soften the blow as much as they can. For the moment, it will be business as usual, and possibly some way into the New Year as the government gets to grip with the decision.