Mr Christopher Heaton-Harris, Conservative MEP for the E Midlands, rejects calls for extension to derogation

 

In the first negative response to MBM’s letter to MEPs, Mr Christopher Heaton-Harris, Conservative MEP for the E Midlands, has rejected his party’s line on red diesel to say that he does not believe the derogation is justified.

Mr Heaton-Harris told MBM:

“I am afraid that I do not think marine pleasure craft should be exempt from tax duties. Unlike agriculture and commercial fishing craft which depend upon red diesel, the leisure water craft industry does not need subsidising in this manner. I believe this thriving industry is not in need of economic protectionism. In fact the RYA’s Water Sport’s Participation Report of 2004 says that participation in water sports continues to increase and in the last year general motor boating participation alone rose by 4000, not withstanding the other categories of participation that use red diesel.

“I must also add that the EU only lays down minimum rates of duty which must be paid and the individual member states are then free to decide the rates at which they will charge their national citizens, above the EU minimum. Therefore on this subject you may wish to write to your local MP to enquire as to why fuel duty is so high in the UK.

“Following lobbying in Westminster by Theresa Villiers MP and Richard Benyon MP, the UK government announced in its budget report in March this year that it would apply once again for this same derogation. The European Commission is now preparing its report to the European Council of Ministers assessing all the current derogations.

“My colleague James Elles MEP has written to the European Commissioner for Taxation, Commissioner Kovacs, tabled a parliamentary question, and contacted MEPs from the other member states affected by this derogation. I can assure you that he will continue to defend the UK leisure boat industry.”

MBM appreciates Mr Heaton-Harris taking the time to reply, even in the negative. Unfortunately, Mr Heaton-Harris’s reply fails to take into account several points.

Firstly, it is not true to say that red diesel is “tax exempt”, though it is taxed at a lower rate than roadside diesel.

Secondly, is it true to say that the boat industry is subsidised? Boaters do not, after all, use the road infrastructure that fuel tax is supposed to fund. The RNLI receives no governmental funding. If boaters pay roadside levels of tax for their diesel, who is subsidising who?

Finally, it seems a shame to say that because an industry is thriving it should have the carpet pulled out from under it. Studies by the RYA show existing tax levels are not “economic protectionism”, but good economic sense. The financial loss to this country is likely to outweigh the revenue gained from a move to raise tax, meaning that the UK stands to lose out from adopting this point of principle.

If Mr Heaton-Harris is your MEP, you can contact him at christopher.heaton-harris@europarl.europa.eu