APPENDIX 15
Further memorandum submitted by HM Treasury
In your letter dated 30 June, you asked for
some additional information relating to the Committee's inquiry
into road fuel sales in Northern Ireland. We are grateful to you
for extending the deadline for our response until today. I take
the opportunity to provide in this letter some of the information
which the Economic Secretary undertook to send when she gave evidence
to the Committee on 23 June.
Taking the points arising from the hearing first:
— Mr McGrady (Q283) commented that
between 1990 and 1999 the excise duty on road fuels in the UK
rose by 246 per cent. The Economic Secretary thought that figure
to be rather high. According to Customs figures, the duty on unleaded
petrol rose by 142 per cent and that on diesel by 164 per cent
over that period.
— Mr Grogan (Q267) asked how the percentage
of revenue losses from the smuggling of road fuels compared with
that for alcohol and tobacco. The Economic Secretary gave the
figure of £100 million for both smuggling and legitimate
cross border shopping, which amounts to less than 0.5 per cent
of the total yield. It is not possible to break this figure down
into smuggling and cross border shopping. However, figures are
available for smuggling for alcohol and tobacco. The percentages,
which are not therefore direct comparisons, are beer 4 per cent;
wine 3 per cent; spirits 1.5 per cent; hand rolling tobacco 75
per cent; and cigarettes 3 per cent. These are based on data contained
in a technical report placed in the House of Commons Library on
19 November 1998.
— The Economic Secretary undertook,
in reply to a question from Mr Hesford (Q280), to see whether
we had any estimates of the impact of fuel smuggling on our Kyoto
obligations. On a very broad brush basis we estimate that additional
fuel consumption arising from cross border shopping and smuggling
amounts to 0.03 per cent of total UK CO2 emissions, so the impact
is very small if not negligible.
— The Minister also undertook to look,
in conjunction with Lord Dubs (Q284, 286), at the Dutch scheme
for subsidies to filling stations. This work is not yet complete,
but I hope to be able to write to you again very shortly.
Turning now to the points you raised in your
letter:
— You asked whether it would be a criminal
offence to use Irish rebated gas oil in circumstances in which
it would be legal to use UK rebated gas oil. The duty on rebated
gas oil in the UK is £0.0303 per litre. The rate in the Republic
of Ireland is currently slightly higher than that at 0.0373 punts
per litre. Any person wishing to bring Irish rebated gas oil into
the UK would have to pay UK duty and mark it to UK standard by
the addition of a red dye, except when it is contained in the
standard tanks of a vehicle. Since rebated gas oil cannot be used
in road vehicles, in practice the only way it can be imported
legally without payment of UK duty is in small supplementary tanks
used to run refrigerated units. "Green" diesel found
in the UK other than in these tanks, which did not also contain
the UK red dye indicating that UK duty had been paid, would be
liable to seizure.
— The various statistics you requested
for the last five years are given in the enclosed table.
— Your third question concerned marking
of UK duty paid road fuels. We assume that you wish to know whether
by marking UK duty paid petrol and diesel, Customs would be able
to detect smuggled fuels more easily. Both primary and secondary
legislation would be required, but we do not believe it would
be contrary to Community legislation. Primary legislation would
be needed to introduce a distinction between marked fuel which
could be used on the road, and that which cannot. Currently no
marked fuel can be used in road vehicles. Secondary legislation
would also be needed to cover offences. The presence of the marker
would then indicate that the product was UK duty paid, but its
absence would not indicate it had been smuggled, except where
it was found in bulk. We could not have an offence of running
a vehicle on unmarked fuel, because it could have been bought
legitimately in the Republic. This would limit the effectiveness
of the measure. And there would be other practical difficulties.
If the presence of the marker indicated UK duty paid status, then
it would have to be proof against counterfeiting, and held in
secure conditions to prevent theft. This would add greatly to
the compliance costs for the oil companies, which would presumably
be passed on to the consumer in higher prices, adding to the differential
with prices in the Republic.
— You asked two questions about the
French scheme for rebates for road hauliers. The procedure for
Article 8(4) derogations is that application is made to the Commission,
who will refer the request to other Member States if they are
satisfied that it does not distort competition or the operation
of the single market, and that it is compatible with Community
policy on the protection of the environment. In that event, the
request goes to Council as an "A" point, although there
may be informal discussions prior to that to ascertain whether
any Member State disagrees with the Commission's view. The UK
did not object to the French request, agreeing that it was a matter
for subsidiarity. Council approved the derogation earlier this
year. However, it should be noted that this scheme applies throughout
France: there is no precedent for such a scheme restricted to
a particular region.
— Customs have no information about
how foreign lorries are treated under the French scheme.
— On your sixth point, I understand
the Economic Secretary's private Secretary has already written
to you[4].
— Finally, you asked about the responsibilities
of the Fiscal Liaison Officer in Dublin. The primary role of the
Fiscal Liaison Officer is to facilitate mutual assistance and
mutual legal assistance for the purposes of preventing, detecting,
investigating and prosecuting trans national commercial fraud
common to our interests. Direct operational assistance takes place
between agencies to acquire information and intelligence for control,
compliance and investigation purposes. Mutual legal assistance
is a more formal process for obtaining sworn evidence admissible
in court. The Fiscal Liaison Officer has been able to contribute
to cross-border co-operation between Customs' Northern Ireland
Collection and Irish Customs by helping to co-ordinate local and
wider operational arrangements.
13 July 1999
|
| Year | Category
| Quantity (Ltrs) |
|
| 1994-95 | ROI Green Diesel (gas oil)
| 202 |
| Red/Green mix | 7,336
|
| Total | 7,538
|
| 1995-96 | ROI Green Diesel (gas oil)
| 23,165 |
| Red/Green mix | 19,700
|
| Smuggled DERV | 600
|
| Laundered gas oil | 900
|
| Kerosene | 6,450
|
| Total | 50,815
|
| 1996-97 | ROI Green Diesel (gas oil)
| 10,663 |
| Total | 10,663
|
| 1997-98 | Red/Green mix |
20,639 |
| Smuggled DERV | 199,906
|
| Laundered gas oil | 62,507
|
| Petrol | 11,796
|
| Total | 294,848
|
| 1998-99 | Red/Green mix |
48,703 |
| Smuggled DERV | 471,713
|
| Laundered gas oil | 147,497
|
| Petrol | 27,829
|
| Total | 695,742
|
|
In addition, there have been admissions to the smuggling
of over 30 million litres of fuel covering the period 1 January
1998 to 30 June 1999. The admissions can be segregated as follows:
| Unleaded Petrol | 23.7 million litres
|
| DERV | 7 million litres |
| Leaded Petrol | 2.8 million litres
|
|
| Total | 33.5 million litres
|
4
See the note added to Question 259 Back
|
