Finance Bill 2002
EXPLANATORY NOTE
CLAUSE 5: BIODIESEL
SUMMARY
1. These amendments change the date of introduction of a new rate of duty on biodiesel fuels by amending the Finance Bill to introduce the new rate on a day to be appointed rather than at Royal Assent. They are being proposed as a precautionary measure to ensure that there is no possibility that the United Kingdom breaches the Treaty of Rome by introducing the new duty rate before state aid clearance has been received.
DETAILS OF THE CLAUSE
Page 5, line 10, Clause 5, leave out ?the date on which this Act is passed? and insert 'such date as the Commissioners of Customs and Excise may by order made by statutory instrument appoint?.
Page 5, line 17, Clause 5, leave out ?on which this Act is passed? and insert ?appointed under subsection (6) (a)?.
Page 5, line 26, Clause 5, leave out - that on which this Act is passed? and insert ?appointed under subsection (6) (a)?
Page 5, line 28, Clause 5, , leave out ?day on which this Act is passed? and insert ?date appointed under subsection (6) (a)?
The extent of these amendments are described in the summary below.
BACKGROUND
2. The Government launched the Green Fuel Challenge (GFC) in November 2000 to promote the development of practical alternative transport fuels with environmental benefits, inviting industry to come up with practical proposals for such fuels. In response to proposals received, a series of duty cuts for alternative fuels was announced in Budget 2001, including the reduction to the duty on biodiesel used as road fuel from Budget 2002.
3. The reduced rate was intended to come into effect on Royal Assent, providing the UK has secured European agreement to its request for a derogation from the mineral oils structures Directive. Although the derogation received final approval from the EC Agriculture Committee on 25 June and is now in place, it still awaits clearance as an allowable state aid by the Commission. The Government expects that this will be given in the next few weeks which will mean that in all likelihood all aspects of clearance by the EC will have been completed by the date of Royal Assent. There is nevertheless a possibility that this will not be achieved in which case, although unlikely, the UK could be in breach of the EU Treaty. The Government are proposing that the effective date for the reduced rates of duty be amended from Royal Assent to a date to be set by Statutory Order by The Commissioners of Customs and Excise.