Further Memorandum submitted by the Freight
Transport Association
Thank you for your letter of 18 March confirming
that my letter of 12 March will be circulated to the Members of
the Northern Ireland Affairs Committee. FTA will be pleased to
give oral evidence to the Committee on this matter.
However FTA would like to bring to the attention
of the Committee another related matter which is also causing
considerable concern in the road transport industry at the present
time. I refer to the recent punitive increases in Vehicle Excise
Duty (VED) imposed in the March Budget, e.g., the rate for a 40
tonne FIVE axle (2+3) vehicle was increased from £3,210 to
£5,750 per year.
This type of vehicle is widely used elsewhere
in the EU and ROI particularly for long distance international
haulage. Setting this high VED rate unfairly penalises the use
of this type of vehicle for all UK operators and creates a substantial
cost disadvantage compared to continental based operators many
of whom enjoy VED rates that are a fraction of the UK levels,
e.g., Netherlands £670, France £486, Portugal £308
per year.
In the Irish Republic, the VED rate for this
type of vehicle is £1,384, i.e., more than £4,000 less
than the UK rate. For the Northern Ireland operator, this huge
differential allied to higher fuel duty rates and the effects
of illegal fuel sales means that competing with firms in the Republic
is now totally out of the question. For some, it will mean closure
because they can no longer run a viable business. Inevitably this
situation will result in more Irish vehicles working in Northern
Ireland, as well as more Continental vehicles in the UK as a whole,
which clearly would be detrimental to the Province's road transport
industry.
In response to this serious situation, many
operators have taken the unusual step of registering their vehicles
in the Irish Republic to benefit from the lower VED and many more
are in the process of doing so. While this practice may go some
way to easing the financial burden on operators, it is by no means
an ideal solution and it could ultimately result in operators
moving their entire fleets and depots into the Republic.
It is therefore the firm view of FTA that unless
effective action is taken by Government to reverse the current
trend of escalating transport costs which are crippling the local
industry, the inevitable outcome will be that the Province will
not have an efficient and profitable indigenous road transport
industry and will become increasingly dependent on foreign operators.
Such a situation would not be in the best economic
interests of Northern Ireland and therefore FTA would urge that
the Committee should also undertake an enquiry into this matter.
29 March 1999
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