Further memorandum submitted by HM Customs
This paper by HM Customs and Excise has been
prepared in response to the letter of 29 January from the Clerk
of the Northern Ireland Affairs committee in connection with the
Committee's examination of the sale of fuel oils in Northern Ireland.
The paper follows the order in which the Clerk of the Committee
has asked for the information.
A list of the national borders within the EU
across which there are material differences of road fuel duty
or road fuel retail prices, giving the differences in each case
and details of any specified duty relief or rebate schemes operated
in the frontier areas and designed to reduce locally the impact
of the cross-border differential in retail prices.
The Clerk of the Committee also asks for information
about external frontiers, which is taken to mean non-member states.
This information cannot be made available within the deadline
for reply but, in any case, does not seem relevant because of
the reasons given in section 2. But we are not aware of any Member
State that offers any reliefs or rebates in the frontier areas
with non-member states (but see Italian scheme for Trieste).
Details of any restrictions in EU law which
have the effect of preventing the Government, if it wished to
do so, setting differential duty rates for particular areas of
An estimate, for each of the last five years,
of road fuel duty collected in respect of consumption in Northern
Ireland, broken down by type of fuel.
The Committee should note that Customs and Excise
does not have information in this form but has provided information
from the DTI publication, Digest of United Kingdom Energy Statistics,
Finally, the Committee asks which Minister currently
handles Cusoms and Excise matters. The Paymaster General, Dawn
Primarolo MP, is the Minister responsible for Customs and Excise
and with overall responsibility for tax and the Finance Bill.
However, the Economic Secretary, Patricia Hewitt MP, is the Minister
responsible for taxation of company cars and road fuel.
SECTION 11.1 NATIONAL
(Source: Excise Duty Rate Tables produced
by the European Commission, Directorate General XXI).
|A ||B ||Duty differentials
EU land boundary
|Petrol (ECU per|
|Diesel (ECU per|
|United Kingdom||Republic of
Notes: The Member States in bold in Column B have a duty
differential of 10 per cent on at least one mineral oil product
compared to Column A. 10 per cent is assumed to represent a material
difference for the purposes of this paper.
A plus figure means that the duty rate for the country in
column B is greater than that for the country in column A.
A minus figure means that the duty rate for the country in
column B is less than that for the country in column A.
1.2 EUROPEAN ROAD
Source: Department of Trade and Industry, Energy Policy
and Analysis Unit.
||Diesel||EU land boundary:
||Republic of Ireland||-12.35
1.3 The Committee has asked for details of any specified
duty relief or rebate schemes operated in the frontier areas designed
to reduce locally the impact of the cross-border differential
in retail prices. Schemes in the Netherlands and France are cited
as possible examples.
1.4 This grants a subsidy to filling stations within
20 kilometres of the German border. It covers light oil, which
we take to mean petrol only (borne out by table showing differentials),
and is paid at a rate of:
100 guilders per 1,000 litres (at an illustrative
exchange rate of 3.2 guilders to the £, this is about 3.1
pence per litre) of fuel delivered into vehicle fuel tanks when
within 10 kilometres of the border; and
50 guilders per 1,000 litres (about 1.5 pence
per litre) when between 10 and 20 kilometres.
1.5 The above is subject to a maximum subsidy in guilders
equivalent to 100,000 ECU per applicant. The scheme also provides
for reductions in the subsidy if German duty rates increase.
1.6 The differential between Dutch (555.80 ECU) and German
(498.45 ECU) unleaded petrol rates is currently 57 ECU. It should
also be noted that VAT in the Netherlands is 17.5 per cent while
it is 16 per cent in Germany.
1.7 There is some question about whether regional relief
of this sort is a state aid. That is certainly the Commission
view and they are currently exploring with the Netherlands whether
or not their scheme offends the state aid principles.
1.8 There is a de minimis amount that would not
constitute state aid. It is 100,000 ECU over a three year period.
But it is per business, not per filling station. A Commission
notice on the de minimis rule, from the Official Journal
of the EC, is attached.
1.9 The Dutch scheme is not a differential duty rate
for regional reasons.
1.10 The partial fuel duty rebate in France has no regional
connotation. France has requested a derogation for a reduced rate
of excise duty on diesel used by commercial vehicles of 12 tonnes
or over, up to an annual consumption of 40,000 litres per vehicle.
This is within the context of the French attempting to increase
diesel duty by more than petrol, ie, they want to do so, but to
spare hauliers the brunt of the impact. The Italians may ask for
a similar derogation. However, the benefit of these derogations
could not be restricted to French or Italian hauliers: they would
have to be available to hauliers from other Member States while
operating in France. This would not offend any state aid principle
because it is not of regional benefit.
1.11 Article 8(4) of Council Directive 92/81 permits
the Council to authorise Member States to introduce exemptions
or reductions for specific policy considerations. Council Decision
97/425 authorises Member States to continue to apply existing
reduced rates of excise duty for mineral oil when used for specific
purposes. This effectively continues some of the derogations that
Member States negotiated on adoption of Directive 92/81: these
derogations are automatically extended for periods of two years
unless the Commission proposes abolition or modification.
1.12 The only derogation of a regional nature authorised
under paragraph 1.11 is in Italy for consumption in the regions
of Val d'Aosta and Gorizia.
1.13 The continuation of certain other exemptions and
reductions in rates of excise duty has also been authorised under
Council Decision 97/425. These applied until 31 December 1998
and were subject to review by the Commission at that time. However
the review was not completed and the period has been extended
to 31 December 1999. The purpose of the review was to ensure that
the derogations are compatible with other Treaty provisions. Those
of a regional nature are:
in France for consumption on the island of Corsica
provided that the reduced rates at all times respect the minimum
rates of duty on mineral oils as provided for under Community
in Italy for a reduction in excise duty on petrol
consumed on the territory of Friuli-Venezia Giulia, provided that
the rate of duty respects the minimum rate provided for under
in Italy for a reduction in the rate of duty for
mineral oils consumed in the regions of Udine and Trieste, provided
that the rates of duty respect the minimum rates provided for
under Community law.
1.14 Council Directive 92/82 provides for the approximation
of the rates of excise duties on mineral oils. This Directive
has Articles that relate to rates of duty for certain regions
in Portugal and Greece; these are all islands. They are:
Article 9.1. The Portguese Republic may apply
rates of excise duty on mineral oils consumed in the Autonomous
Region of the Azores lower than the minimum rate laid down in
this Directive in order to compensate for the transport costs
incurred as a result of the insular and dispersed nature of this
Article 9.2. The Hellenic Republic may apply
rates of excise duty up to ECU 22 lower than the minimum rates
laid down in this Directive on gas oil used as a propellant and
on petrol consumed in the departments of Lesbos, Chios, Samos,
the Dodecanese and the Cyclades and on the following islands in
the Aegean: Thasos, North Sporades, Samothrace and Skiros.
2.1 The Committee goes on to ask for details of any restrictions
in EU law which have the effect of preventing the Government,
if it so wished, setting differential duty rates for particular
areas of the UK.
2.2 The UK would have to apply for a derogation under
Article 8(4) of Directive 92/81. No derogations have been granted
to permit reduced rates to be applied in particular regions other
than those agreed during the course of negotiations of the Directive
3.1 The Committee also asks for an estimate, for each
of the last five years, of road fuel duty collected in respect
of consumption in Northern Ireland, broken down by type of fuel.
The following table has been compiled from the Digest of United
Kingdom Energy Statistics, 1998 (Table No 4.11). These figures
have been used, as previously explained to the Committee, because
Customs and Excise collects duty at an early point in the distribution
chain, delivery from refinery or import warehouse. Much of the
road fuel distributed in Northern Ireland arrives there duty paid
and so is not subject to any Customs controls.
* These figures are for the first nine months of 1998:
the fourth quarter figures were not available at the time of writing.
18 February 1999
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