Why Red Diesel

[nigellaw]

Why do we have Red Diesel for leisure craft in the first place? I drive my diesel car for fun and don't get a reduction in fuel tax why would I because I chose to own a boat for fun? I understand that nobody likes things to get more expensive but what is the justification for cheap diesel for leisure boats

We surely don't believe that people who choose to own a multi thousand pound cruiser can't afford to fuel it at the same level of taxation that I have to pay for my car fuel? Or is this not about who can afford to pay? Supporting the leisure boat industry is surely not a valid argument as boating holidays are already one of the most expensive holiday options you can take in the UK, and why is that? Take a look at the expenses that aren't covered in a typical Broads holiday and the asking price for 20 plus year old cruisers, I have trouble believing the hire boat companies aren't making enough.

This really isn't a troll, I just don't understand why Red Diesel!

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[BrendanS]

the simple answer is that the duty levied on road fuel is meant to help pay for roads and infrastucture (yeah, right, just general taxation in reality). What is the duty on sea fuel meant to pay for? It certainly won't go towards infrastucture, the sea repaves itself twice a day! Just more general taxation, is the main thrust of the arguement, and if you read many of the arguements here, the marine industry in the UK will fall apart at the seams, as no one will be willing to pay the additional cost.

One part of your arguement I don't understand is the multi thousand pound cruiser bit - what about those that own much cheaper cruisers - there are a lot of them

<hr width=100% size=1>Me transmitte sursum, caledoni

 

[rickp]

I'm suprised you didn't ignore this one Brendan. Definitely troll. Look at the facts: Proclaims not to be a troll, but new user and asking a question that has already been discussed to death on this and other forums.

Rick

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[gjeffery]

Whatever the moives of the post, this is the question that a Devil's Advocate might put, especially since Road Tax is now related to the efficiency of the vehicle. Incidently, I thought it was road tax that notionally pays for road infrastructure.

Light charges is the other one to be resisted, and I think with absolute justification, but I have been wondering if the cost of the development of Loran C is the reason why the Light Charge issue has been raised - or is that another thing entirely?

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[longjohnsilver]

You don't think it's a shortened name? Nigel Law(son)? Or maybe he's really Gordon Brown in disguise?

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[nigellaw]

Thanks Brendan. I am just amazed red diesel exists as a concept, everything else is taxed and it seems unusual for a a taxable leisure item to have escaped. As I said definately not a troll and though this may well have been 'talked to death' as somebody else here I think put it, there is little resoned discussion and lots of angry/annoyed rhetoric none of which serves to educate people genuinely trying to understand the debate.

The comment about multi thousand pound cruisers was a lead in to try and understand whether this is a 'tax the rich argument' or not.

I have a problem believing that the UK leisure boating industry is going to fall to bits because of an increase in diesel prices. Increases in petrol prices have not stopped people from driving cars! After all, what is the fuel consumption of your average dirty old middle of the road leisure marine diesel engine? Compare that with an hours motorway driving at 70 mph in a diesel car, for my Seat thats about 7 to 8 litres I guess (unless my maths is right up the chute, which is possible). How does that compare with a boat diesel????

What any tax collected is spent on is an argumentative red herring really as motor vehicle taxation defiantely does not all get spent on road infrastructure and we end up in a messy discussion about taxation in general.

No, Nigel Law is my real name and definately not short for Lawson

Long live the revolution.

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[andy_wilson]

Why?
'Cos nobody wants to duplicate the diesel tanks and pumps at the waters edge to cater for the fishing vessels (red diesel) and leisure vessels (proposed white diesel).

The big issue is that EU wants a common level of duty on fuel across the community. As fuel duty is such a big contributor to the nations coffers, if we reduce our general levels of fuel duty to those of Euro-neighbours, we will have to 'Up' Income tax to their levels too.

Insted we get half a job. Raise the duty on red, but don't lower it on everything else.

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[Gludy]

"Why do we have Red Diesel for leisure craft in the first place? "
I think its amazing that some folks ask why there is not a tax when they really should be asking why there is a tax.

"I drive my diesel car for fun and don't get a reduction in fuel tax why would I because I chose to own a boat for fun?"

Tell you waht folks hit golf balls for fun - thet take up huge areas of land and use mammoth amounts of water to keep it all green - its for fun so lets add £15 tax to each golf ball!!!

Almost everything we do is for 'fun' past surviving which tales up a tiny proportion of resources it all because we choose to do it. There should be no guilt whatsoever about enjoying things for fun without the government taxing it!

"I understand that nobody likes things to get more expensive but what is the justification for cheap diesel for leisure boats"

I could pick out thousands of things that are not taxed as high as petrol - why does not high fashion get taxed as high as petrol. Why don't shoes get taxed as high as petrol ... in fact why does not everything we buy get taxed as high as petrol? its a great brain washing the job the govermenet has done on you when you have to ask for the justification of NOT taxing something.

Why not tax our biggest CO2 problem - aircraft fuel to petrol levels and stop millions going on holiday?

"We surely don't believe that people who choose to own a multi thousand pound cruiser can't afford to fuel it at the same level of taxation that I have to pay for my car fuel?"

In many cases its a fact that they cannot - the marginal cost of a trip would become prohibitive. As it happens these folks have probably paid enourmous amounts of tax already in their lives ... in practice diesel at £5 plus per gallon would kill the UK cruising power boat indistry.

Just because someone chooses to save and spend on a boat as opposed to say drinking in the pub every night does not mean they should have their hobby taxed out of existance does it?

Further why have red diesel for commercila boats when 99% of what they carry is for fun ... there is no logical difference between a holiday cruise, a boat full of cars and dvd players and a private motor cruiser ... if there is then someone should tell me.

"Or is this not about who can afford to pay? "
No ita about EU legislation that is a pretence about something to with conformity of fuel prices across the EU. On this basis the question should be why we do not half the price of petrol overnight.

"Supporting the leisure boat industry is surely not a valid argument as boating holidays are already one of the most expensive holiday options you can take in the UK, and why is that? Take a look at the expenses that aren't covered in a typical Broads holiday and the asking price for 20 plus year old cruisers, I have trouble believing the hire boat companies aren't making enough."

What do you mean by that, I cannot make sense of the points?





<hr width=100% size=1>Paul

 

[nigellaw]

"I think its amazing that some folks ask why there is not a tax when they really should be asking why there is a tax."
We know why there is a tax. Tax is necessary to raise income for government spending.

"Tell you waht folks hit golf balls for fun - thet take up huge areas of land and use mammoth amounts of water to keep it all green - its for fun so lets add £15 tax to each golf ball!!!"
As near as possible I was trying to compare like with like, two means of personally owned transport for pleasure that use the same type of fuel. Not sure where golf comes in.

Where did the guilt over having fun thing come from? I certainly have no guilt about having fun and it not being taxed.

"its a great brain washing the job the govermenet has done on you when you have to ask for the justification of NOT taxing something."
It's not brainwashing when you ask questions trying to understand why something is one way rather than another. More generally an intelligent act.

"Why not tax our biggest CO2 problem - aircraft fuel to petrol levels and stop millions going on holiday?"
A good question though taxing aircraft fuel would not stop millions going on holiday, it would just make it either more expensive or cut into the profits of the holiday companies.

"In many cases its a fact that they cannot - the marginal cost of a trip would become prohibitive. As it happens these folks have probably paid enourmous amounts of tax already in their lives ... in practice diesel at £5 plus per gallon would kill the UK cruising power boat indistry."
Sorry Paul but I still do not believe that somebody who can afford a multithousand pound boat can't afford to fuel it. Every car owner knows that petrol tax will go up inexorably with succesive budgets. However, there has been no massive reduction in car ownership because of petrol taxation.

"Further why have red diesel for commercila boats when 99% of what they carry is for fun ... there is no logical difference between a holiday cruise, a boat full of cars and dvd players and a private motor cruiser ... if there is then someone should tell me."
There is plenty of 'logical difference'. A commerical ship carries cargo on which tax will generally be paid at point of import and or point of sale. That's the stuff that helps drive a countries economy. On the other hand one might argue that the pleasure boat that makes cross channel trips to buy goods with little or no tax and then bring them back to the uk to sell in the pub or car boot sale and pays no tax on his fuel either does worse than contribute nothing to the general good. Of course I wouldn't argue that but......now you have an idea of the difference between a commercial trading vessel that continually generates revenue and a pleasure boat that doesn't.

My comments on the leisure boat industry are suggesting that it makes a good living thank you very much and there is scope to reduce pricing to offset any rise in diesel tax that affects the industry. It would be intersting to know how many hours your average holiday maker runs an engine and just how much of a monetary difference a tax on disel would make to an average holiday.

There, continually polite answers with no recourse to name calling etc. We can be polite in debate cant we






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[Gludy]

"We know why there is a tax. Tax is necessary to raise income for government spending."
No .. this is why there is tax - and not why there is this proposed tax. If what you say was true then we do not have to worry because putting red up to petrol prices will raise LESS tax not more.

"Where did the guilt over having fun thing come from? I certainly have no guilt about having fun and it not being taxed."
Great then there can be no classification based on leisure or essential aspects of why red should be taxed.

I strongly disagree with you. I claim your points are without any foundationm in fact and your understanding of how the economy works is flawed and simplistic.
However, I do believe you are sincere and none that follows is personal. Its just that I simply hab=ve to deal with your points.

" good question though taxing aircraft fuel would not stop millions going on holiday, it would just make it either more expensive or cut into the profits of the holiday companies."

No, an increase to petrol prices would incur a major price hike and so reduce demand ... its that simple. It would stop many people flying.

"Sorry Paul but I still do not believe that somebody who can afford a multithousand pound boat can't afford to fuel it. Every car owner knows that petrol tax will go up inexorably with succesive budgets. However, there has been no massive reduction in car ownership because of petrol taxation."

I know folks who struggle to keep their boats going and 3 to 4 times hike in the market price of fuel will stop them dead. I know ricj people who would still noy go on a 3 hour trteutn trip if the cost is £1200 instead of £300 so you are wrong BUT why should anyone afford it ... why raise the tax at all?

As regards cars, after the first fuel shortage in the USA, the standard USA car almost dissappeared overnight. If car ful was to go up three times, so would many motorists.

"There is plenty of 'logical difference'. A commerical ship carries cargo on which tax will generally be paid at point of import and or point of sale. That's the stuff that helps drive a countries economy. On the other hand one might argue that the pleasure boat that makes cross channel trips to buy goods with little or no tax and then bring them back to the uk to sell in the pub or car boot sale and pays no tax on his fuel either does worse than contribute nothing to the general good. Of course I wouldn't argue that but......now you have an idea of the difference between a commercial trading vessel that continually generates revenue and a pleasure boat that doesn't."

How wrong can you be!!! There is no difference, I spend a lot of money every year on my boat and associated things and all of that generates income, tax etc. Even buying the boat in the first place generates a very large amount of tax .... if it were not for the folks buying the DVD players there would be no commercial boats bringing them .... you seem to define the only worthwhile things as things that generate tax for central government and even that is wrong.
Folks going on pleasure cruises generate income for all sorts of people... folks crossing the channel create jobs, tax and wealth ... any activity does. You simplistic understanding of this is so flawed that it beggars belief .... nor do I accept that taxation is for the general good.

"My comments on the leisure boat industry are suggesting that it makes a good living thank you very much and there is scope to reduce pricing to offset any rise in diesel tax that affects the industry. "

At no point have you stated why there should be a tax in the first place!
Fairline returns on their capital are so poor that I would frankly not put up with it in my business .... where on earth do you get that logic on on it all from except some form of jealousy? Its an attitude of "they are rich so lets tax them, they can afford it"

"It would be intersting to know how many hours your average holiday maker runs an engine and just how much of a monetary difference a tax on disel would make to an average holiday."

One freight ship can burn 220 tonnes of fuel per day. If ocean liners had to pay petrol prices the industry would collpase overnight - so to would holiday charter flights. Even a small rise in aircraft fule price produces a hefty surcharge for holiday makers!

Please explain why this tax should be placed in the first place ... you have no rational whasover behind your point other than the simplistic thing about tax being good for all and they can afford it so tax it sort of logic.

You state there is nothing wrong with fun but actuall differentiate between ferries carrying people and cargo ships carrying DVD players for thois people on the gounds that one generates more tax than the other!!! Even that is not right as a statement.

IF a hike in red diesel to the same as petrol could be shown to producr a drop in tax yield ... would you still support the hike?

Do you support the hike for the stated reason compatability with Europe?

I really beleive you are sincere, I respect you for that but I cannot help but debate in the strongest terms your points because they do defy logic.






<hr width=100% size=1>Paul

 

[nigellaw]

I can see that on many things we will have to agree to disagree. Of course some arguments are simplistic but that does not make them flawed, wrong or any less valid than your own, just not gone into in great depth as forums do not lend themselves to huge tracts of text I would sugest that your own understanding of economics is also flawed and you also work with little foundation in fact relying more on personal opinion. How you manage to equate the comparitevly small amount of tax revenue you generate in owning a boat in comparison to a freighter conveying millins of punds worth of taxable goods does, in your own words, "beggar belief"

We both obviousley have sincerely held views and any further toing and froing is likely to achieve little and we certainly don't want to degenerate into rudeness etc. do we

If you look at any of my posts I have never expressed an opinion for or against, I started out trying to find out and understand why there is no tax on red diesel. Any point you make implying that I do support it or have argued for it is invalid as at no time have I done so. You have argued strongly against it and mistaken my comments on taxation in general as support...as I say, invalid

As a business owner myself I have little love for European harmonisation of anything and am as deeply suspicious of government initiatives on tax as the next man.

Your assertion that a red diesel tax would generate less tax overall needs explaining and with something other than your own opinions on what the outcome will be. Some facts and figures would lend more weight to any argument.

Finally to be clear, I do not support an imposition of tax on red diesel for the reasons given. If the harmonisation reason was a good one we would be seeing a fall in petrol tax and probably a few others as well.

Thank you for your sincere input as you and others have helped a little in the understanding I set out to achieve in the first place.

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[Gludy]

"How you manage to equate the comparitevly small amount of tax revenue you generate in owning a boat in comparison to a freighter conveying millins of punds worth of taxable goods does, in your own words, "beggar belief" "

Its is not just my boat , its all power boats. Just as the freighter delivering their DVD's is not just for one person!

" I started out trying to find out and understand why there is no tax on red diesel. "

For the same reason there is no big tax on golf balls!!

I always think the other way around... why should this be taxed .. not why is it not taxed.
You have put no point forwrd that supports it being taxed.

"Your assertion that a red diesel tax would generate less tax overall needs explaining and with something other than your own opinions on what the outcome will be. Some facts and figures would lend more weight to any argument."

I have already done this in a previous thread but basically the nuts and bolts arew this.

The total amount of tax raised if everyone bought the same amount of fuel only comes to the order of £15m ... this is very unlikely as most would at least have to reduce fuel usage, some would go abroad and some would get out of boating.
However the government raise about £1 billion from the leisure boat insudtry so only a 2% drop in that revenue is £20m and more than wipes out any gain. The effect of a trebling of the fuel price would get rid of many out of the bottom end of the market and there would be a knock on effect right through the market.





<hr width=100% size=1>Paul

 

[fireball]

In response to your original question: Why is there no tax on leisure fuel?

Probably (and this is only a guess!) because the leisure craft industry is reasonably new and grown up alongside the commercial fleet who are not taxed. I would assume the government has previously seen taxing leisure boats to be a non-starter for the various practical reasons stated elsewhere on this forum. So there you have it... in my opinion, the leisure fuel is currently not taxed as it has never been reasonably practical to do so.

Now there is an EU directive they have an excuse to put through the change..

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[Gludy]

I think you are right .... that is the way it has happened and now they have the excuse, if not the logic.

<hr width=100% size=1>Paul

 

[halcyon]

There is tax on red diesel, the differance is that non red has road fuel duty, as you do not drive your boat down the public highway, you do not pay the road portion.
Logical rearly, but why we should have to start paying for what we do not use and will not use is another matter.

Brian

<hr width=100% size=1><A target="_blank" HREF=http://link>www.kddpowercentre.com</A>

 

[tcm]

Re: aha! well done gludy

Quote:
"The total amount of tax raised if everyone bought the same amount of fuel only comes to the order of £15m ....However the government raise about £1 billion from the leisure boat industry so only a 2% drop in that revenue is £20m and more than wipes out any gain."

I think this is the best and simplest stance/argument against the proposed rise in fuel duty. Easy to say, easy to understand.

Are your figures about right (ish) Gludy? I don't think that a major crash in boat values/usage would happen but a 2% drop within UK if fuel trebled in price? - easily, if not almost certainly.



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[Gludy]

Re: aha! well done gludy

These figures were supplied by someone who had done the research in a previous thread.

Howver even without the research, it takes a very small percentage of people to stop boating or move to the med to have a major effect. In addition those using less fuel - all would mean that the tax yield, at best was not much higher if higher at all than today. However just a marginal decrease in tyhe boating business wipes it out.
Some folks have already started leaving power boating. if one small cruiser no longer does its 100 hours, say 1500 gallons per annum, it takes a lot of making up, even at the higher rates to get the tax back.

There is no money in taxing red for the government the demand curve is highly elastic.


<hr width=100% size=1>Paul

 

[Sammo]

Re: aha! well done gludy

Nigellaw

Quote
Why do we have Red Diesel for leisure craft in the first place? I drive my diesel car for fun and don't get a reduction in fuel tax why would I because I chose to own a boat for fun? I understand that nobody likes things to get more expensive but what is the justification for cheap diesel for leisure boats

Perhaps I can give you a clear sensible answer as you ask so nicely.

I have owned boats now for over thirty years and worked my way up to a 38 ft powerboat with 2 x 220 HP Perkins diesel engines.
Your diesel car does not compare in any way to a boat, but if you wish to lets do it

Car fuel tank 11gals - boat 300 gals
Car speed 100+mph - boat 22 mph
Car fuel usage 35 mpg - boat 1.5 mpg

Are you getting the point?

Car running costs not including fuel £ 750.00 per year
Boat running costs not including fuel £ 2500.00 per year

Go for a leisure drive in the car, round trip 50 miles – fuel cost £6.00 approx
Go for a round trip in a boat 50 miles, fuel costs – now £50 - with tax £250.

So you see a boat does not compare with a car and never will.
To answer the second part of your question. Because for safety reasons a boat usually has a much larger engine(s) than a car, with fuel at £1 per gallon they still cost a lot to run but it is affordable.

High earners with a lot of money won’t be bothered by the increase one bit, the ones it will hit hardest are the ones who have a boat though hard work and sacrificing holidays cars home improvements ect. In fact Me!

It’s so unfair,

 

[halcyon]

Nigellaw

The tax used to be road fuel duty to help cover road repairs, the more fuel you used the more you contributed.
Now most boats are not used on the road, and use red diesel without road fuel duty.
As they do not use the money for roads anymore, they dropped road from the title.

Brian

 

[Guest]

The upper end of boat market ....

To comment about marginal costing and demise of big boats etc. - is cr-p .....

Most big boats / upper end of boating market is Company owned and Tax write-offs ..... so the 'owner' will write off his costs against company ....
A lot of the big boys only run Webasto or Eberspacher systems anyway ..... they stay in marina's so much - the mooring lines would fall apart if moved ......
The real pain will be felt by Joe Bloggs who cannot do the same, cannot reclaim VAT etc.