Hints are increasingly being dropped that the Chancellor might target the 'red diesel' tax break available to farmers. Ending the overall freeze on fuel duty could be politically difficult, but the £2.4bn revenue foregone on construction and farming vehicles could be an attractive target.
Red diesel (so called because it is coloured red in an effort to avoid fraudulent use) has a duty of 11.1p a litre against 57.7p for standard diesel used by motorists. It is only supposed to be used on the farm itself for machinery such as tractors and combine harvesters. It is not supposed to be used on the highway. It is used by airport vehicles and most freight trains run on it.
It was originally thought that just the construction industry and perhaps airports would take a hit, but that might be difficult to enforce in practice. I would have thought it more likely that the reduced duty will be phased out rather than eliminated overnight. However, it will be another blow to farmers reeling from the phasing out of direct payment subsidies.
The Government launched a consultation on the subject last year which details its long history and the issues that have arisen: Red diesel
No comments:
Post a Comment