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Michael Clarke
Email: [EMAIL PROTECTED]
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      UK. Treasury Secretary announces application to European Commission to 
renew red diesel derogation
      Tuesday, 17 October 2006
      Government news:


      John Healey MP, the Financial Secretary to the Treasury, announced 
today that the UK has submitted its application to the European Commission 
to retain a derogation that allows for the use of 'red diesel' in private 
pleasure craft. This derogation allows the UK to charge a reduced rate of 
fuel duty for 'red diesel'.

      The UK has also submitted two further applications to the European 
Commission, to continue derogations for fuel used in private air navigation 
and for waste oil reused as fuel. These derogations allow the UK to charge a 
lower rate of duty for fuel used in private planes and no duty for waste 
oils.

      John Healey said: "We have now submitted our application to the 
Commission to maintain the derogation allowing the use of 'red diesel' in 
private pleasure boats. We believe that removing this derogation would 
provide no significant revenue or environmental benefits to the UK, would 
undermine other EU objectives and could pose significant compliance costs 
for business and fuel users.

      "In putting together our applications we have benefited from a great 
deal of helpful co-operation and advice from UK boating organisations, whom 
I would like to thank for helping us prepare the strongest possible 
application. The ball is now in the Commission's court.

      "In the meantime, we will take every opportunity to restate our case 
to the Commission and to impress upon it the importance of this issue for 
the UK."

      Gordon Brown, the Chancellor of the Exchequer, announced in the 2006 
Budget that the UK would formally apply to the European Commission to renew 
these derogations. Now that the application has been made, the next step is 
for the European Commission to respond to our application for renewal, along 
with those being submitted by other EU Member States.

      For the derogations to be retained requires a proposal from the 
European Commission and unanimous agreement by the EU Council of Ministers.

      Editors note:

      The Energy Products Directive (EPD) sets the framework for the 
taxation of energy products and electricity within the EU, including minimum 
rates and structures. The EPD allows for a number of derogations for various 
energy products.

      The UK's three derogations allow for reduced duty rates of 6.44ppl as 
opposed to 47.1ppl for rebated gas oil ('red diesel') for use in private 
pleasure craft; of 28.1ppl for aviation gasoline used in private aircraft as 
opposed to 56.2ppl for leaded petrol; and for waste oil reused as fuel, 
which has no duty, as opposed to 6.44ppl.

      The three derogations collectively cost the UK less than £25m a year.

      The three derogations predate the Energy Products Directive.

      Last Updated ( Tuesday, 17 October 2006 )





 
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