Scuttlebutt red diesel posts

[jfm]

imho need to improve the economic analysis

I have wathced this debate only from the sidelines - I buy fuel in France so doesn't affect me.

But my observation is that no convincing argument has been made for the claim the tax will lead to less tax revenue rather than more. It seems to me pretty clear there will be more tax revenue to government coffers.

I dont want to set out a long boring economic post but remeber:
1. most UK boat builders sell most to export markets. And of their UK customers many are not at their finacial limits when buying, ie the increased £££ annual fuel running cost will not affect the buy/not buy decision. There will only be marginal impact for UK boat builders therefore

2. There should logically be a step change downwards in the 2nd hand value of UK based boats. I mean if today a boat is worth £100k, and after the fuel price rise the running costs is say £1000pa more, then logically the boat becomes worth say £95k. That is a painful result for the owner of the boat, but the guy who buys it for £95k will surely use it for the standard 100hrs a year or whatever, and there will be more fuel tax collected. The person who has economically suffered the fuel tax cost is the person who happened to own the boat when its value fell from 100k to 95k.

3. of course the total diesel consumption will fall (eg because current boat owners will keep the boat but do less mileage) but not so much as to reduce the tax take, and of course reduced fuel burn is exactly the effect the government wants

4. When people claim the servicing etc industry will shrink, yes it might, but there is still a certain amount of GDP in this country and generally there will be a migration of people away from the boat industry into other industries. The ex boat servicers will not all become jobless.

I'm not saying any of these economic effects are right or wrong, I'm just saying I find the claim that no tax will be collected unconvincing. All imho and happy to be corrected .

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[Gludy]

Re: imho need to improve the economic analysis

I found your observations interesting - although I have to stringly disagree with them.

Im my area we purchase red for £1.20 a gallon - if the concession ends - it rises to say £5 a gallon - a 400% rise.

I know many dozens of power boat owners and many sacrifice a lot to have their power boat. A short local trip for us would be Ilfracoombe - I asked an owner of a 37 footer how much the trip costs in fuel - he told me £40. I asked him if he had tp spend £160 what would he do - his answer was very clear - he simply could not afford it, he would have to get out of boating. That story was repeated with everyone I have asked. Many, many people maintain their own boats and struggle to keep it going - it s passion a labour of love. So I see the bottom falling out of the market - people would not be willing to pay twice as much as you pay in France. More to the point - they simply could not justify the trip.

Another trip is Padstow - a 35 footer instead of paying £100 would pay £400 - he said he could not justify it, it would be cheaper to take a charter holiday.

I myself could not justify spending £1500 to go on a three hour trip and back. I would have my boat based abroad.

There are a mass of boaters like that and very few who would not bother. So I strongly believe that the impact would be huge.

There would not be a 5% drop in boat prices - the market would be such that you could not sell a cruising power boat - the only market left would be for the very rich.

"There will only be marginal impact for UK boat builders therefore"
The new market needs the second hand market to buy on - in the UK the bulk of the spending in the marine industry is power boat based - that industry would be very hard hit indeed. The UK boat builders that build to the middle market would be hard hit.

"of course the total diesel consumption will fall "

It would dramatically fall because many would no longer be boating and all the associated spending would go. In my case alone, based on last year's total expenditure as I improved my boat etc, I will be shipping at least £20k per annum spending outside the UK. It is going to take a lot of extra tax to be raised to make up for the total pull outs of boating that will take place. There is not just the lost tax on fuel - all the associated income taxes, corporation taxes etc of the marine industry - the tax loss would be considerable BUT even it was not the case the amounts we are talking about here are tiny, they do not appear on the radar scan of government fiscal planning.

". When people claim the servicing etc industry will shrink, yes it might, but there is still a certain amount of GDP in this country and generally there will be a migration of people away from the boat industry into other industries. The ex boat servicers will not all become jobless."

I agree there will be some migration and in other cases no migration - however there would still be considerable losses that have to be clawed back by extra taxes and that is just not possible. Further such adjustments should be gradual - not overnight - so in the short term of a few years the tax loss would be higher.

", I'm just saying I find the claim that no tax will be collected unconvincing. All imho and happy to be corrected . "

I my marina - I guess 70% are power boats - about 85% of the spending would be power boats. I doubt if more than a dozen cruising power boats would be there if the price of fuel was increased to £5 per gallon.

I believe you are underestimating the effect of a 300% to 400% price hike.

Have I moved you an inch?




<hr width=100% size=1>Paul

 

[Bergman]

Re: I\'ll second that

Just waiting for the bad news from accountant so anyone who wants can pay my bit.

I'll gladly doff the cap.

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[Bergman]

Re: I\'ll second that

Just waiting for the bad news from accountant so anyone who wants can pay my bit.

I'll gladly doff the cap.

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[claymore]

If the tax did come in and it meant us paying around £5 per gallon a 400% increase - as one post in this thread quotes, - would it mean fewer motorboaters or would you just take it on the chin and pay?
I know the numbers are much higher but I always wondered whether budgetary increases on Beer and Cigarettes ever stopped anyone from drinking or smoking.

Although a sailingboatytypie person, I would be most pissed off on your behalf if this ever did happen.

<hr width=100% size=1>regards
Claymore
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[Gludy]

It without doubt would take the floor away from motor boaters - a typical 35 footer gives say about 1.5 galls per mile - assuming a round trip of 45 miles = 90 miles would consume about 60 gallons - cost say about £80 - that same trip would cost £240 to £320 if the concession is lifted and that makes it uneconomic for most to justify. Put another way a boat doing this would, in today terms suddenly find itself paying as much as a 66 footer does today.

I know may boaters who are by no means wealthy people - they struggle to keep their boat going as it is - this hike would see them out of the market. Many of those who maybe could afford it would still not choose to spend money on fuel at that rate because they could not justify it.

Power boating in UK weather is marginal at best - the dearest fuel in Europe would tip the balance well away from it.

What would happen if tomorrow road fuel went to £15 per gallon? Most journeys we make are totally for our own convenience and choice - some would still be able to carry on as before but many would fine it crippling - filling a Discovery would cost £240 a tank - such a dramatic increase would be past the means of many car owners.

The campaign is really a simple one - its the right to continue to use red diesel - if that rises due to VAT etc, then fair enough - I would not like it but would swallow it. To separate leisure boats out is so complex a problem for so little gain and almost certain revenue loss, my hope is that it will be just too impractical for them to do.

Mind you it looks as if they are about to bring in light dues when there is no registration system for boats - therefore taking a major step to compulsory boat legislation - Light dues alone would not justify such a big step but the chances are the incompetence of government will ensure it happens.


<hr width=100% size=1>Paul

 

[ari]

So how come the rises in marina fees over the last five or six years have had no effect? If anything marinas are fuller!

In terms of annual costs I'll bet marina fee increases compared to 5 years ago cost more annually than the tax on fuel would.

Certainly not pro the tax, but realistically, it isn't going to cause people to throw their hands in the air and sell the boat at a huge loss, there'll be a lot of muttering and all will carry on as before.

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[Moose]

" it isn't going to cause people to throw their hands in the air and sell the boat at a huge loss"

Yes it is, can you not see that only the mega rich are going to be able to carry on with a Motorboat, nobody in their right mind would pay £500 for a trip to France and back, nobody could afford it. If you cannot afford to run your boat what are you going to do??? Sell it!



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[ParaHandy]

i agree with claymore and i made the same point as you now do some time ago but you could or would not agree ..... perhaps i didn't make it clear what i meant.

some up in scotland could find it very difficult getting hold of diesel if the current red-diesel outlets refuse (not unreasonably) to stock both red diesel for commercial customers and taxed diesel for leisure sailors. Closer to home, would a place like Weymouth sell both?

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[whisper]

Agreed. If we end up paying the same as for road fuel then there is no doubt at all that I will no longer have a boat. There is no way that I could justify the cost. Doing around 150 hrs p.a. my fuel bills would more than double my total boating costs /forums/images/icons/frown.gif

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[Gludy]

"So how come the rises in marina fees over the last five or six years have had no effect? If anything marinas are fuller"

Which marina increased their fees 300% to 400% overnight?

Which Marina increased their fees 300% to 400% over the last 5 years?

At the end of the day, the cost of a trip that cost £200 in fuel would cost £600 to £800 in fuel and to argue that folks would just carry on as before with those sort of costs is absurd.

Taking an typical 35 foot boat consuming say 20 gallons an hour doing a typical 100 hours per annum = 2000 gallons - in my marina today the fuel cost is £2600.
This cost would rise to £10,000- an extra £7,400. A boat doing 200 hours per annum would pay an extra £15,000 per annum - total fuel bill for 200 hours per annum is £17,600. These sort of costs dwarf any rise in marina costs - in my marina a 35 foot boat costs about £2000 per annum. So the extra cost for 200 hours of boating is 7.5 times the TOTAL cost of the marina berth for such a boat.

There are many places all around the coast of the UK where boaters are not rich people but teachers, middle management, mechanics etc who have to sacrifice a lot to keep their boat - a rise in fuel cost of 300% to 400% would not even leave them with the option of a further sacrifice - they simply would not have the money to afford it and cruising power boats would be the sole sactuary of the rich.

So please when comparing how the market would react to prise rises compare like with like



<hr width=100% size=1>Paul

 

[Planty]

Mine would definitely be up for sale and I'd probably have to take one hell of a hit on price. Thinking about knock ons,
MDL OV would lose 6k+ in moorings, possibly not replaced 'cos high % doing same.
Total Yacht Care confirm, he would shut up shop virtually overnight
John Lewis/Waitrose suffer massive cut in profits as SWMBO not in Southampton at weekends and JLewis not in B'ham to compensate
UCL Cinemas and Bowling Alleys same effect due to Sons lack of attendance
Alladins cave same effect 'cos of my absence.

In fact none of our expenditure would be spent elsewhere, except the bank,as we would still be paying back a debt arisen by the fact of the devaluation in the boat!

And thats just me, mind you having written this I think I'm going to have a serious word with myself!! Paul

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[flaming]

Just out of interest, how many of you who say that you will sell the boat if red diesel goes would consider the move to a raggie?

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[KevB]

"it isn't going to cause people to throw their hands in the air and sell the boat at a huge loss"

Oh yes it is.

We sacrifice a lot to run and pay for our boat, if fuel prices are dramatically increased, instead of spending our money in UK marina's we will be spending it on holidays abroad. I would imagine that an area such as the Solent only survives because of the money spent by visiting yacht people. Take away a fair proportion of motor boaters and suddenly the area is not so attractive to the leisure industry and places close and or get run down.

We have covered nearly 400 hours in just over two years, a rise in fuel prices will make the use of our boat unaffordable. I suppose we could just sit in the marina and use it as a floating caravan but no thanks, especially with our weather.

A rise in diesel tax will have a negative effect on the whole boating scene whether you are motor or sail - who would want to go to the Folly Inn on a Saturday night and only have it half full, or lose the buzz of Yarmouth on a hazy summers weekend?

Think about it before you say it'll make no difference. The difference could effect you.


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[Deleted User YDKXO]

Personally, I would modify my boating in terms of doing less hours but no way would I buy a raggie boat. I've tried it and its not for me. I suspect that the vast majority of mobo owners would feel the same

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[jfm]

Re: imho need to improve the economic analysis

Gludy: thanks for reply. Just saying it as I see it, and imho the economic case needs working on by the mobo side of this debate.

I agree nearly everything you say, but my point is that some of it can easily be dismissed by govenrnment types who want the tax. I mean, some of it is not knock-out argument.

You mention curtailing boat use if the Padstow trip was £400 instead of £100. But the government wants that, to meet our CO2 targets. And if you had the choice between buying a boat for £100k and paying £1/gallon for fuel, and buying the same boat for (say) £90k but paying £4/gallon, you would be indifferent right? (I have not computed the maths exactly, but you see my point). So there will not be a bottom-fall-out-of-market, there will be a rational price adjustment of 2nd hand boats.

As for boatbuilding and boat support industries (retail, whatever) industries being hit, yes they might be but the govt view will be that resources employed there will largely migrate to other sectors. We have close to full employment in UK.

I'm not saying even I believe all these arguments, and I'm not saying you must be wrong in what you say, I'm just saying that what I write in the above 2 paras is easily sayable by a govt bod who wants to push the tax thru. We, the mobo and raggie side, need to develop better economic analysis, and our analysis needs to be more macro - currently it is too micro and too much "random assertions" rahter than supported by analysis. All imho!

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[Oldhand]

Help, there you go giving the marina operators ideas again. You are implying to them that they could squeeze us harder as their price rises aren't stopping us boating! Unintentional I am sure.

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[Oldhand]

Such a good question it deserves a new post IMHO.

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[flaming]

Feel free to make that post! I was only asking out of curiosity.

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[ari]

"Which marina increased their fees 300% to 400% overnight?

Which Marina increased their fees 300% to 400% over the last 5 years?

At the end of the day, the cost of a trip that cost £200 in fuel would cost £600 to £800 in fuel and to argue that folks would just carry on as before with those sort of costs is absurd.

Taking an typical 35 foot boat consuming say 20 gallons an hour doing a typical 100 hours per annum = 2000 gallons - in my marina today the fuel cost is £2600.
This cost would rise to £10,000- an extra £7,400. A boat doing 200 hours per annum would pay an extra £15,000 per annum - total fuel bill for 200 hours per annum is £17,600. These sort of costs dwarf any rise in marina costs - in my marina a 35 foot boat costs about £2000 per annum. So the extra cost for 200 hours of boating is 7.5 times the TOTAL cost of the marina berth for such a boat."

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Diesel is currently what, about £1.30/gallon?

Road price is what, £3.50/gallon?

Lets take your typical 35ft boat. A Fairline Targa 35 with typical twin Volvo AQAD 41/dp 200hp diesels uses 12 gallons an hour.

So per hour it'll cost £26 more. Average use is realistically about 50 hours a year (check any list of secondhand boats and look at the hours/year).

So additional cost for our Fairline 35 Targa owner (of which even a 15 year old one is going to be circa £60K so we're not talking Mr. Breadline here) is about £1,320

Even allowing for extra hours/fuel consumption/price increase you'll maybe wind that up to £1,500 - £2,000

Certainly not £10-15 THOUSAND!

Now how much would you say his marina berth has gone up in the last 5 years...?

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