_____
From: Pam Stevenson [mailto:pam@aopa.co.uk] On Behalf Of Martin Robinson
Sent: 08 December 2006 18:57
Subject: AOPA message-See Below
Dear Member
We have another problem on which we seek your help. The text in this
email
has been developed jointly between AOPA and BBGA as we work together to
try
and do something about this very difficult problem.
The news that the EU Commission has rejected the UK=92s application for
the
retention of the current Duty derogation on AVGAS and JET A1 is very
disappointing.
The UK=92s Application to the Commission, developed after discussions
we held
with the Treasury, stated the following:
The United Kingdom would like to apply exemption from excise duties to
fuel
used for the purpose of private pleasure flying. Private use of jet fuel
would be fully exempted from duties and aviation gasoline would be
taxable
at a reduced rate of half the tax rate for leaded gasoline. The United
Kingdom maintains that there are minimal benefits from the shift to the
standard tax treatment in comparison to the costs and other consequences
associated with the expiry of the derogation. Therefore the main
objective
of the measure is to avoid costs of transition. In particular, the
United
Kingdom highlights the compliance costs on suppliers of aviation fuels
and
on the industry and stress the administrative costs and enforcement
difficulties for the administration associated with the expiry of the
derogation. The United Kingdom further explains the negative effects on
both
the private pleasure-flying sector and many small businesses associated
with
it. Furthermore, it would increase the cost of training which would grow
the
trend for pilots to train in the United States. In addition, removing
the
derogation would raise safety issues if users were tempted to put
unleaded
petrol rather than aviation gasoline. On the other hand, the United
Kingdom
points out the insignificant revenue gain and the small benefit in terms
of
carbon emission saved associated with introduction of the general tax
treatment
Although the derogation officially ends on 31 December nothing will
happen
for the moment. The government has to work out what measures are
necessary,
how to enforce them and in what timeframe this will take place. The
Treasury
Minister, John Healey, has made it clear to the Commissioner that the UK
will need a transitional period in which to implement the changes
required.
The Commissioner acknowledged this but ultimately the Commission has to
agree to such transitional arrangements.
Regrettably, the Commission on 30 November 2006 decided
(http://eur-lex.europa.eu/LexUriServ/site/en/com/2006/com2006_0742en01.pd
f)
not to propose to member states an extended exemption of aviation fuel
used
for private pleasure aviation. Without a Commission proposal on the
extended
exemption, member states have no means of granting such an extended
exemption. It is the exclusive right of the Commission to decide whether
to
propose an extended exemption or not, and member states cannot oblige
the
Commission to do so.
The Commission decision means that as of 1 January 2006, all EU member
states will be obliged to apply EU minimum excise duties on aviation
fuel
for private pleasure flying. Such minimum excise duties already today
apply
in 15 out of 25 member states, who in the past decided not to make use
of
the exemption granted until the end of the year.
The Commission decision of 30 November 2006 does, however, allow member
states, whose private pleasure flying sector will suffer difficulties
from
the end of the excise duty exemption, to adopt unspecified measures
aimed at
"alleviating or mitigating problems of transition to the regime of
standard
taxation".
This decision will affect AVGAS and JET A1. The =93minimum=94 duty rates
may be
found here
http://ec.europa.eu/taxation_customs/resources/documents/taxation/excise_
dut
ies/energy_products/rates/excise_duties-part_II_energy_products-en.pdf
The key issue now is to ensure the UK adopts this decision sensibly,
using
the mitigations measures where possible. For instance the AVGAS duty
today
is only about 2p a litre below the EU minimum for motor fuel so there
should
not be a need to add the full 29p per litre difference between AVGAS and
leaded motor fuel that exists today. The other critical area centres on
the
description of =93private pleasure flying=94. The Directive notes,
=93For the
purposes of this Directive =91private pleasure-flying=92 shall mean the
use of
an aircraft by its owner or the natural or legal person who enjoys its
use
either through hire or through any other means, for other than
commercial
purposes and in particular other than for the carriage of passengers or
goods or for the supply of services for consideration or for the
purposes of
public authorities.=94
.
So what do we need to do?
We all need to make the following points to our local MP=92s and your
MEP if
you know who they are:
The total amount of AVGAS used in the UK each year equates to 3-4 hours
of
motor traffic in London. The Current high price levels of AVGAS is a
reflection of high global fuel prices and low volumes of AVGAS
production
and add to that the cost of distribution in rural areas and you begin to
get
an idea on the size of the problem, which leads to the present situation
of
Avgas at @ =A31.30 per litre against Petrol at =A30.869 per litre. Over
20
years ago AOPA and GAMTA (now BBGA) argued successfully for a reduction
in
the duty on Avgas which reduced the duty of Avgas by half when compared
to
the Duty on Petrol. The impact of the EU Directive is to potentially
realign
the tax rate.
Many small businesses, Flying Clubs, small AOC operators and aerial work
operations will have much higher fuel bills which will need to be passed
on
to the customer which intern is likely to speed up the current flat
level of
activity in to a major downturn. This will affect flying clubs and
flying
groups particularly and they will need to increase the hourly rate as
the
impact of such an increase in fuel prices is very significant. When you
write to your MP please ask them to ask the Treasury why we are unable
to
set our own tax rates? Also ask your MP to enquire as to how the
Government
intends to reduce the impact of this directive on the GA community.
Please send a copy of your letter to HYPERLINK
"mailto:info@aopa.co.uk"info@aopa.co.uk
AOPA AND BBGA WILL MEET WITH THE TREASURY IN THE NEXT FEW DAYS AND WE
WILL
REPORT BACK TO YOU IMEADIATELY AFTER THAT MEETING AS WE SEEK THE BEST
WAY TO
MITIGATE THIS UNDEMOCRATIC DECISION.
Thank you
Martin Robinson
Mark
Wilson
Chief Executive AOPA Chief
Executive BBGA
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08/12/2006
12:53
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09/12/2006
15:41
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