Red diesel economics

[[2574]]

To try and add some factually based discussion on the economic merits of the red diesel argument I have put together an estimate of the tax gains from increased fuel duty and compared this to an estimate of the tax losses from the impact on the industry of such a change. My calculations, which by their nature are of course full of assumptions, shows that there is a net tax loss to the Treasury of about £15m. This would be considered tax neutral as far as the government is concerned. What I have not factored in is the impact on the employees and owners of the boatbuilders who would surely be very badly affected. They would need to rely almost exclusively on the export markets.

Having done the sums it is absolutely clear to me that this is a political decision as the economics are immaterial from a Government perspective. Regrettably us motor boaters are a very small proportion of the electorate and the motorboat construction industry is similarly tiny and would disappear without trace. We do need MBY & MBM & the RYA to make as big a fuss as possible for us so that government make the right decision on the day. I expect the decision is such a small issue that it will be made after work over tea and biscuits by a junior minister who won't understand the depth of feeling by those affected but will know that it's tax neutral and vote neutral so who cares? Who's got a coin that we can toss?

My local MP is Sandra Gidley, a liberal. They want to increase taxes and probably take the view that use of hydro carbons in this way is not "green" and therefore wouldn't support the cause. I hardly dare raise it with her as I fear she might campaign in the opposite direction.

Rob

ps I tried to post the economic workings on here but copy and paste from Excel all goes squiffy for some reason so you'll have to believe me. If anybody wants a copy of the Excel file showing the workings I am happy to send it across via email.

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[Nauti Fox]

I am really dismayed to see whats being said on Scuttlebut and feel that we really don't stand much chance if we can't even be united.
Al.

<hr width=100% size=1>No dear,the water goes in the other one.

 

[Planty]

Couldn't agree more, long time since I have seen such a load of purile argument, and have just posted on scuttlebutt to say so, lets see what that brings out of the woodwork? Truly I can't believe what I've just read over there! Paul

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[oldgit]

Saw you go past on Monday? (going at a very sedate sort of speed if I might say so) while we wus fishing in Stangate.Half decent morning but afternoon was foul.

<hr width=100% size=1>If it aint broke fix it till it is.

 

[Jools_of_Top_Cat]

Acshully, of the 100 posts I would suggest only 3 said they actually supported a hike in fuel prices. The others, myself included joined a discussion about how you were going to justify holding off the wolf from adding this proposed tax to fuel.

Don't drive a wedge between raggies and MOBO's as that would be totaly counterproductive. If you take this stance already you don't stand a chance when you try to convince the non boating public.

I also saw a threat by a MOBO about creating extra wash just to get back at sailing boats, even though said in jest. It was also said at one point in a half hearted threat in my opinion that should a raggie need rescuing the MOBO stance will now be serves you right! is it any wonder some raggies are not interested in your cause? Right now you need to actually start being nice to sail boaters even if you think their chosen hobby is nuts, because as you have said you are going to need bums on seats when the crap hits the fan.

Coming back here and taking shots at those on sbutt is only going to cause harm init?

<hr width=100% size=1>J

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[Joe_Cole]

At last! Someone is trying to put a case together, rather than just moaning about the proposed tax increase. If the MOBO fraternity really wants to win this arguement then this is the way to do it. Mind you, the figures really do need to stand up to rigorous scrutiny.

Apart from a bit of winding up, most of what is being said is that you need to tackle the political realities and present a clear case. So far I haven't seen one.

And stop moaning at the raggies! They are not the enemy!

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[Gludy]

I think any proper analysis would show a tax loss and I would expect it to be larger than the £15m you suggest.

As you say this will be a political decision. There is no extra revenue for the chancellor.

<hr width=100% size=1>Paul

 

[[2574]]

Yes, I would have expected a larger tax loss also. But when one does the figures it becomes apparent how insignificant the whole subject is in economic terms to the government. Even if i am 300% wrong with my numbers the tax situation is still neutral. I would need to be 2000% wrong before it even appeared on the government economic radar.

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[Gludy]

I understand and agree with your point - in terms of revenue the matter is neither here or there and as you say not on the radar - they may try to put it under the environmental hat so that they look good.

My fear is that the issues will not be understood and so bad governement will happen.

I would like to know the headings for your model. Waht areas does it cover?



<hr width=100% size=1>Paul

 

[[2574]]

Paul,

I've calculated the fuel tax revenue from some assumptions regarding the numer of boats in the UK. I've then calculated the VAT and the Corporation tax loss from the marine businesses that supply boat owners. I've been trying to post the data here - but can't do it. It seems that I also can't attach a file to a PM that I might send you. I've got the file in Excel and PDF formats.

Rob

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[flaming]

As one of the raggies who expressed an opinion on the other forum I'm dissapointed that the argument put forward by the majority seems to have been misunderstood. On a personal level no one wants to see a 400% hike in fuel prices. However the argument being presented to save red deisel is not a strong one.

Try this exercise. Find a run of the mill landlubber and try and convince him that red diesel should be saved. It's not easy.


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[[2574]]

Granted, but one of the flawed premises on which some of this argument is being promulgated is that taxation should be fair. Tax is not fair, never has been and never will be, that's a fact. So any discussion as to it "being right that it should be taxed" is fundamentally flawed in my view and has no legs as an argument.

The only premise on which taxation might be justified is the environmental aspect of this discussion, but that argument can be defeated in so many ways. For example look in any marina car park and you will see wall to wall 4 litre V8 petrol four wheel drive off road vehicles that rarely stray beyond Hampstead Heath. Likewise sporty cars with huge engines capable of 150mph (just see Jeremy Clarkson's programme!) and what's the point because if you get over an average of 40mph in the UK you're doing very well indeed. The people who drive these vehicles could be equally well served by an Audi A6 diesel doing about 50mpg, immediately halving pollution. The USA won't sign up to the Kyoto treaty because of their need to consume energy so the green argument for powerboats in the UK just doesn't register on the scale of environmental issues.

So, back to my original post - it's a purely political decision - just as fox hunting is.

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[poter]

it\'s a purely political decision.....

.....of course it is, lets all (power & wind) just try & stand outside the boating fraternity & look at ourselves.

What do you see? A very affluent middle class section of the community playing with their rather large expensive toys..............AND getting cheap fuel!
(I know its not true but thats what you would see)

Crikey lets tax em! & we will get all those hard working over taxed landlubbers on our side.

Or am I being disingenuous & cynical of our environmentally conscious politicians?

poter

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[Andrew_Fanner]

Kim, can it go into the part of the site devoted to the campaign? Then we can all see it.

<hr width=100% size=1>Two beers please, my friend is paying.

 

[halcyon]

Re: Red diesel not seen this before

Just had our owner's association quarterly, in it was a bit on red diesel, which has information I've not seen.
If red diesel is scraped we us Ultra Low Sulpher Diesel (ULSD), older marine diesels are not designed to run on it, and it causes havoc with fuel pumps. The truck industry went through it a couple of years ago. Modern engines with fuel pumps designed for ULSD are ok, but the fuel system must be spotless.
Another problem is the collection of water, refining uses high pressure steam to remove the sulpher, and ULSD acts like a magnet to moisture. With road vehicles it is constantly being changed due to usage, but what is going to happen on a boat were it is sitting in tanks for long periods.
When things change from red to ULSD for non commercial operators, are people going to stock both ? what will be the cost of two storage syatems ? who is going to pay?
When the diesel goes up to match EU duyty rates, road fuel must come down to match EU rate, so motor baoters that do a high milage in there cars may break even, and are likely to have modern engines that will run ULSD. Equally it may be yachties who do not use there car's and have a old engine that could end up coasting a furtune.
Plus the loss in road fuel duty is going to be greater than the gain in red diesel.

May be a load of rubbish, may be true, but it is something I've not read in the 1,000's of words writtren on the forum.

Any one with comments.?

Brian

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[ontheplane]

Start an MSN Community.... it's completely free....

Then post a link here,

You can put Excel sheets, files etc in there - who knows that community might take off too in it's own right.

Grant

<hr width=100% size=1>Why can't we work 2 days a week and boat the other 5????