PetrolWorld has learned that the illegal use of red diesel has risen from 2% to 12% in 2011. Illegal fuel laundering is costing the Irish government €150m each year, and almost an eighth of all diesel sold in Ireland is illegal, according to a new report by retail Ireland. In a submission to the Government on the issue, the industry group called for tax reform and a better resourced Law Enforcement and Revenue response to combat the problem.
‘Green Diesel’, intended for agricultural use, is given favourable tax treatment both in the Republic of Ireland and the UK, and contains a dye to identify it. However, criminal gangs have exploited this by removing the dye from the fuel and selling it for domestic use. "Rising prices have encouraged criminals to exploit the substantial difference in price between diesel intended for agricultural use and for road use,” says Retail Ireland Chairman and Topaz Retail Director Frank Gleeson.
According to Retail Ireland, recent import figures suggest that 12% or more of all diesel sold in Ireland is illegal. The organisation urged the Government to equalise the duty rates for agricultural fuel and motor fuel and to introduce a reclaim system for agricultural fuel users. It also called for a robust marker to agricultural fuel that is easily detected by Revenue, and an audit scheme from bulk storage at port to fuel service station that offers real traceability of the product.
In addition to this, Retail Ireland also argued that premises selling diesel should be subject to the same licencing requirements as for petrol under the Dangerous Substances Act, No. 10 of 1972. This would allow fuel service stations and sites selling illegal diesel to be closed.
The group also said that the penalties for laundering fuel should be increased, and that more resources should be directed to finding and prosecuting offenders. "While the recent seizures and arrest are highly commendable, resources should be redeployed within the Customs Service and An Garda Síochána (Police) to tackle fuel laundering. This would be self-financing, would help reduce State borrowing and would put criminals out of business," Gleeson argued.
"Legitimate fuel retailers are already struggling to survive in a difficult economic market. Their livelihoods are being threatened because they are being undercut by cheaper laundered diesel,” he added. “The inevitable consequence is fewer hours worked, job losses and in some cases business closures.”
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