I thank the joint committee for the opportunity to meet it this afternoon. The Irish Road Haulage Association, as Ireland's largest recognised road transport representative body, is committed to tackling head-on the issues affecting its industry. It seeks to build the future of the Irish road transport industry by developing and promoting industry standards, facilitating road transport operator education and training, educating end-users and securing an equitable business environment.
The haulage industry is an indigenous and highly competitive sector of Irish industry. However, it is being pushed to the brink on the back of increasing fuel prices. Diesel is the raw material of the haulage business. While traditionally it represented approximately 35% to 40% of our cost base, it now accounts for more than 50%, as a result of the increases in fuel price, carbon taxes and excise duties. It is worth noting that the Irish road haulage industry does not receive any financial assistance from Government and is a net contributor to the State. We represent more than 16,000 vehicles, 30% of the truck fleet in the country, but are doing 80% of the work. We are completely efficient in comparison with the own-account sector.
Evidence of the seriousness of the situation can be seen in the Irish Exporters Association's recent call on the Government to address the increased costs facing exporters as a result of cost increases being suffered by the haulage industry. In a country where economic prosperity is largely dependent on export demand, the Irish road haulage industry is of significant strategic importance in facilitating the export-led economic recovery of the State. The industry is comprised of many small to medium sized operators, family businesses, who service our economy's freight requirements. It is these operators who are feeling the brunt of the cost pressures facing the industry. Potential means of relieving these pressures at no cost to the Exchequer are set out as follows.
The IRHA suggests that a mechanism similar to the payment of excise duty on fuel used in motor vehicles for the transport of drivers and passengers with disabilities should be employed. The association surveyed some of its members and asked Deloitte to look at the high level reasoning behind its position. Following the Deloitte analysis of the matter, the association conducted an industry-wide survey to provide a more accurate picture to Government in support of our case. The findings of this extensive survey support what Deloitte stated, namely, that there is clearly a significant loss to the taxpayer as a result of fuel being purchased abroad. Our international fleet goes to Belgium, France, Holland and Spain every week and we are now purchasing all our fuel abroad. For example each time one of our trucks fills up in, say, Belgium, the Irish taxpayer loses €600, including the 48 cents in duty which goes into our tanks. Each truck carries in the region of 1,200 to 1,400 litres, which lasts a truck approximately one week. We fill our trucks in Belgium when coming home on a Friday evening with Irish imports. The gain to hauliers is approximately €120 per week, while the taxpayer is losing €600. The reason is that for the past ten years the Belgian authorities, as well as their French, Spanish and Dutch counterparts, have had an essential fuel user rebate that is index-linked to the rising or falling cost of fuel. This, in turn, has led to fuel being purchased abroad by Irish hauliers, as well as by hauliers from Northern Ireland and elsewhere in the United Kingdom who traditionally would have filled up in this country, with a net gain to the Exchequer. In addition to the current administrative requirement pertaining to the rebate for transporting people with disabilities, the Irish Road Haulage Association believes the following additional requirement should be met to apply successfully for an essential user of fuel rebate for hauliers: the ability to produce an up-to-date haulage licence and a tax clearance certificate, as well as fuel invoices and a certified claim by an accountant to prevent abuse.
Another issue to be considered in the rising cost of fuel concerns green diesel, while everyone is aware of the practice of fuel laundering. The effect of the use of green or washed diesel on the competitiveness of the haulage industry is a major issue for our members and is grossly distorting the market. It also constitutes a significant drain on the Exchequer. There certainly is merit in considering a rebate system in which there would only be one excise charge for all diesel products but which would include an agricultural rebate system in which registered tax compliant farmers could reclaim the cost of diesel on a monthly basis. Both the AA and Retail Excellence Ireland believe in the necessity for a change in the system. A number of potential methods are available for consideration and being used in other European countries. The Irish Road Haulage Association would be glad to work with the relevant Departments in taking a sensible approach to resolving this matter. As everyone is aware, the impact on the environment in recent weeks of such fuel laundering has been considerable and as the price of diesel at the pump increases, so will the increase in the use of illegal fuel. This issue must be tackled straightaway as, apart from the environmental impact, it costs the taxpayer €600 million to colour the fuel. Our point is that a rebate should be given to farmers and fishermen. I note that, in addition to the repayment scheme in respect of disabilities, a scheme is also in place for fishermen, under which a rebate is given at the point of sale and that the scheme is working positively. A fisherman can register with his or her oil companies and has the pick of five or six such companies. When the trawler comes in, he or she takes the best price and is given the fuel, minus VAT and whatever rebate is availabvle. There is no administration involved and it tightens the tax net for the Exchequer.
On road tax, the Irish Road Haulage Association seeks to introduce a pay-as-you-go road user charge for commercial vehicles, which would entail the abolition of the current road tax regime to create a more efficient and, therefore, more effective road tax mechanism for heavy goods vehicles, which would be of benefit to both the sector and the Government. The existing road tax mechanism for commercial vehicles is creating severe difficulties for road haulage operators in Ireland owing to the outdated rationale employed to ascertain the appropriate sum a road haulage vehicle should pay for its tax disc. In the short term the association proposes that all commercial vehicles above 3.5 tonnes be taxed on their gross vehicle weight, not, as is currently the case, their unladen weight. Were gross vehicle weight to be the reference point, there would be a far more transparent and efficient system for all parties concerned.
In the longer term the Irish Road Haulage Association would support the introduction of a distance-based mechanism over and above the outdated road tax system currently in place. The association urges the Government to implement a pay-as-you-go system of road taxation for commercial vehicles that already is in place in numerous countries throughout Europe. The benefits of such a system would be twofold. First, it would allow Irish haulage operators to be far more competitive in the marketplace as they would only pay road tax as it arose, as opposed to absorbing cash flow through annual taxation when in the current climate the vehicle may only be operational for six months of the year. This results in a loss of working capital in an industry in which profit margins are between 1% and 3%. Furthermore, should a pay-as-you-go system be implemented for commercial vehicles in Ireland, the matter of public private partnerships must be revisited as it would provide a greater source of revenue which, in turn, could be reinvested in national road infrastructure. The entire system of toll roads and road taxation could be merged. Vehicles from Northern Ireland, elsewhere in the United Kingdom and Europe, be they used by haulage operators or tourists, drive around the country on national routes free of charge. They use the M50 free of charge and pay the odd toll. However, we believe a system should be introduced such as the Eurovignette which has been in place in the Netherlands for the past 15 years. In such a system people are obliged to pay online or at a local petrol station per day or per three days and the scheme is enforced through the potential confiscation of a vehicle until a fine is paid. We have been working under these conditions for the past 20 years elsewhere in Europe which generate great revenue for the country concerned and which help cash flow in haulage operations.
The Irish Road Haulage Association believes the current policy approach to carbon tax in respect of freight transportation is failing to ensure carbon credit costs find their way to the parties on whose behalf emissions actually arise. The burden of carbon taxes is met by the transport industry. However, as merely a facilitator of demand from manufacturers, traders, distributors and consumers, it often must bear the cost as opposed to being in a position to pass it on to the end-user. The method of taxing carbon should be re-examined to ensure it ultimately is levied on those served by the industry. In the meantime, it is vital this tax is not increased. The plastic bag levy is a prime example in this regard. Plastic bags were got rid of because the tax was levied on the person who used the plastic bag. The current carbon tax is levied on the fuel. Consequently, hauliers bear the brunt because they are tied into contracts and in a competitive environment against illegal fuel. Were the end-user obliged to pay carbon tax, for example, on a movement from China to Kildare, the carbon footprint thereon would encourage greater efficiencies in the transport sector. It would stop someone from sending a truck to Dublin from Cork loaded with four pallets as such a person would now fill the truck in the belief the carbon footprint would be reduced. Under the current system, the small businesses which comprise our industry will be obliged to absorb these carbon taxes each time they are in increased in future budgets. Consequently, having a mechanism such as the plastic bag tax would earn additional revenue and change the thinking of persons who hire our services.
The Irish Road Haulage Association firmly believes the long-term viability and integrity of the industry can be assured only through a mix of the implementation of an essential user fuel rebate, the correct targeting of carbon tax, the eradication of illegal fuel products and revised road tax for commercial vehicles. We respectfully request members to give due consideration to our proposals to ensure the survival of numerous Irish road transport operators and, in turn, protect countless jobs in the sector. Only through the support of the Government and the Oireachtas in acknowledging the industry's contribution to economic prosperity will the current level of employment in this industry be maintained. I note that 2.5 jobs are maintained for each truck on the road and that the association represents 16,000 haulage trucks in this country.
