No easy option in fuel battle
To be fair to the Government, and Revenue Commissioners, they seem to have rejected the excise equalisation idea, which would require oil traders and consumers to pay a much increased price for agricultural diesel, and then apply to the Revenue for a refund.
However, it a sobering reminder of how rising crime can affect everyday business life, if farmers would have to endure major cash-flow difficulties because the State cannot control fuel laundering.
Farmers spend about €160m per year on green diesel, plus about €70m as the fuel portion of agricultural contractor charges. Diesel for agricultural, industrial, heating or marine purposes carries lower tax and duty rates. Agri-diesel costs about 50c per litre less than road diesel.
It is dyed or “marked” green to differentiate it from road diesel. Much of this oil finds its way into the hands of criminals who remove the green dye, and pass the fuel off as regular, full-priced road diesel, through the retail fuel network. They can buy dyed fuel for about 70c per litre, and are believed to sell it for about 10c below the road diesel market price.
The Revenue Commissioners detected and closed nine fuel laundries and seized over 1m litres of oil in 2011.
Fuel retailers estimate that more than 20% of the Irish road fuel market is supplied by this laundered fuel, causing a tax loss estimated at more than €200m.
In Co Monaghan alone, authorities have had to dispose of about 276,000 litres of residues from fuel laundering. This amount is linked to a possible 28m litres of laundered diesel.
Fuel laundering appears to be a problem unique to the 26 counties, insofar as retailers say that at least 90% of the fuel used for laundering is the Republic’s green diesel.
Farmers in the North also have subsidised diesel, but it is dyed red, and very little of it finds its way into the illegal fuel market, according to the Irish Petrol Retail Association
Herein lies the obvious route for controlling fuel laundering — the UK’s Registered Dealers in Controlled Oil Scheme (RDCO). To get red diesel in Northern Ireland, a dealer must be an RDCO licence holder, making monthly returns electronically to HM Revenue & Customs. In such a system, each company can be required to account for its audited marked diesel purchases, to prove it has not gone to illegitimate sources.
Here, the Revenue Commissioners admit that a stronger licensing system is needed. As it stands, in the Republic, the State doesn’t know where green diesel goes after the refinery.
A rigorous audit scheme could be put in place within months.
A new chemical marker would also slow down launderers. Bigger fines are needed too. Stations selling laundered fuel are closed for one day and fined as little as €10,000 — which could be two weeks of profit from selling laundered fuel.
Fuel laundering poses particular threats to rural Ireland. The resulting toxic waste discarded by criminals can cause major rural pollution. It has to be carefully removed and exported for safe treatment, at the taxpayer’s expense.
The many rural dwellers who use road diesel in their cars run the risk of engine failure due to contaminated fuel, which can cost between €2,500 and €15,000 to repair
Agricultural contractors in border counties say they are being squeezed out of business by black economy operators who charge €50 less for cutting an acre of silage, because they use cheap laundered diesel and are not registered for tax and VAT.
Meanwhile, small rural service stations are being put out of business by illegal fuel sellers.
It would really rub salt in the wound if farmers were made to suffer the cost of a system of tax refunds for agricultural diesel — when the State has more effective options for stamping out this costly crime wave.
