A proposal for amendments to the EU Energy Taxation Directive has been published by the EU Commission today.
Its aim is to shift taxation towards energy and climate change objectives and away from the traditional taxation of labour, by reducing energy consumption, encouraging greenhouse gas emission reduction and increasing the use of renewables.
Essentially this would mean moving towards the taxation of both energy use and the content of the fuel used. The key concerns for agriculture are:
- The impact of any proposals which impose a minimum rate of duty on road fuel which in turn results in an increase in the level of duty on red diesel
- The impact of imposing a minimum rate of duty on fuel used for heating in agriculture or horticulture
- The impact of additional taxation based on energy consumption
- The extent and availability of any transitional measures to agriculture and horticulture
- The impact on EU agriculture’s competitiveness.
Lisbon Treaty member states have a veto on taxation which means that any proposals will require unanimous approval. Also, in terms of the main rate of fuel duty on diesel, the UK has a much higher rate than all other member states, some 25p per litre higher than the average.
The full report can be read here.
NFU head of tax Michael Parker said: “Our immediate concern is that the Commission’s recommendations may risk markedly increasing the cost of energy and fuel to agriculture. We already have the highest rates of tax on road fuel in Europe and the duty rate on red diesel has increased nearly fourfold in the past ten years.
“Poorly thought out regulations in this area will have the combined impact of increasing costs for farmers and growers, while decreasing the competitiveness of EU agriculture and risking production being exported to other countries. It is important to remember that fuel use in agriculture has declined over the past decade as machines have become more efficient and farming practices have adapted.
“As a result, we will look to meet with the UK government and partners in the EU to highlight these issues as well as any others that we identify once we have carefully studied the report in full.”
- jojny - 20/09/2011
red up are way is 85 per ltr, it should be coming down not up ,its a joke
- J R ELLIOTT - 14/04/2011
Any increase in the cost of red diesel will be a hard burden to bear. We already have an eyewatering fuel bill and the cost to prifitability will be immense.
- Dr M J Amos - 13/04/2011
It would be unfare to penalise farmers and extensive livestock farmers in particular because if you do an analysis of of the carbon dioxide used by them in relation to the amount absorbed on their farms they would most probably have a negative audit. This is of course not the case for those who use high levels of fertiliser and sprays. What is needed is a calculator which is easy to use by farmers to demonstrate exactly how much carbon dioxide we absorb on our farm which of course in return gives us all of that wonderful oxygen.