31.12.2008

Stop the stealth tax on red Diesel

The CPA, the UK association of equipment rental companies has written an open letter to the UK government regarding the rapid escalation of the duty on the 'rebated' red diesel, used on cranes, most aerial lifts and telehandlers.

In 10 years the duty on white diesel for trucks, cars and vans has increased from 36.86p a litre in 1997 to 52.35p this year, an increase of over 42 percent, while the duty on red diesel has climbed by almost 403 percent from 2.5p to 10.07p.

Here is the letter in full.

Angela Eagle MP
Exchequer Secretary
HM Treasury
1 Horse Guards Road
London
SW1A 2HQ

22nd December 2008

Dear Minister

Re: Fuel Duty

We are writing to you on behalf of the 1,580 Member companies within our trade association who are concerned with the current level of fuel duty.

Our Members range from small independent companies to large multi-national organisations that together generate over £4 billion-a-year turnover, in normal times. They hire out different types of construction equipment including: bulldozers, telehandlers, excavators, mobile cranes, dumpers and back-hoe loaders; which can be frequently seen on construction sites, including the Olympics.

Each business is heavily reliant on both Derv (White Diesel) for delivering this equipment to site and Rebated Gas Oil (Red Diesel) which is used for the equipment’s day-to-day activities. We are very concerned at the year-on-year increases in fuel duty since 1997, in line with the fuel duty escalator. In that time there has been a disproportionate increase in fuel duty between Derv, which has increased by 142% and Rebated Gas Oil which has increased by over 400%! (Please see attached schedule.)

These measures have seen the gradual erosion of the duty differential between these two fuels. If these disproportional increases continue unabated, within 20 years Rebated Gas Oil will have a higher fuel duty than Derv. This will severely damage the Construction Plant industry.

In December 2004, the Government consulted with industry regarding possible changes to the Hydrocarbon Oils Duties Act. CPA held lengthy discussions with representatives of both Her Majesty’s Treasury and Revenue and Customs. These discussions resulted in the agreement that most construction plant vehicles could continue to operate on Rebated Gas Oil; thereby helping to maintain the viability of our Industry. We are questioning why Government appears to be undermining this agreement by imposing disproportionate fuel duty increases to Rebated Gas Oil, particularly since September 2004.

To assist our industry, in these extremely difficult times, we are asking Government to consider imposing a moratorium on all fuel duty increases for the next two years; and thereafter any increases to the fuel duty for both Rebated Gas Oil and Derv should be kept in line with inflation and the differential between Rebated Gas Oil and Derv should be maintained.

I look forward to hearing from you on both of these issues.


Yours sincerely


COLIN WOOD
Chief Executive