Red diesel users have been offered a glimmer of hope that the tax exemption attached to the fuel will remain intact.
The European Commission has published a draft proposal on the issue, which states that the red diesel price perks will be kept as long as the agricultural sector meets its targets to cut emissions.
It had been feared the system was going to be scrapped altogether last week, but the Energy Taxation Directive has given farmers an added incentive to trim their fuel consumption. Technology could now be used to closely monitor the amount of red diesel used within the industry.
“We need a more resource-efficient, greener and more competitive EU economy and [this framework is] an opportunity to shift the tax burden from labour to consumption, in order to favour growth-enhancing taxation,” commented commissioner for taxation and customs Algirdas Semeta.
Red diesel continues to be important to the running of a farm, as the fuel is considerably cheaper than the standard version, with a litre currently costing about 70p in the UK (April 2011). The UK already has 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. Farmers will find any increase in the price of red diesel as a hard burden to bear!