All right. I will then work on the assumption that the early part of the submission about the association may be taken as read. We have appeared before the joint committee today to discuss two issues. The first is the impact on our trade, were carbon tax to be implemented. The second issue concerns the impact if nothing is done about the prompt payment legislation. If the Chairman permits, I will read through some of the submission on carbon tax issues. Were the Government to decide on an implementation of carbon tax on solid fuels, that is, on coal and peat briquettes, for the coming winter season, it would present a clear and present danger in respect of probable and significant job losses within our membership and industry and would have serious implications for our chain of distribution. We also are convinced that far from having a positive impact on the environment and rebalancing the tax base, it would have seriously negative implications across a range of categories in the areas of distribution and sales including job losses of up to 1,200, which is a conservative estimate based on 600 members losing two people each. Clearly, this is a potentially seismic event that will have dire consequences across the industry.
As already indicated, our membership is based within the 26 counties and such losses also will mean significant lost contributions by way of direct and indirect taxes and obviously will result in an increase on the burden to the State. The sale of domestic solid fuels between the key period of September and March is a critical footfall driver for our industry and it anchors and sustains many businesses during a difficult trading period. We already have seen severe disruption to the legitimate supply chain and a decrease in sales as a consequence of the increase in non-compliant fuel imports from Northern Ireland and further afield. The aforementioned fuel imports from Northern Ireland already enjoy a reduced VAT rate. In Ireland, the rate is 13.5%, while the equivalent rate in the United Kingdom and Northern Ireland is 5%. They also enjoy a regime in which their sulphur levels are allowed to trade at 2%, whereas our levels are at 0.7%. From now on, they also will have a carbon tax advantage. A significant advantage also arises from the fact that Northern Ireland and the United Kingdom do not pay any carbon tax on domestic solid fuels, as an exemption was granted on such products in 2000. This point is not generally known here and such a regime was adopted by France in March 2010.
As for security of supply, the current dependable supply of solid fuels sourced nationally will be adversely affected and will have the result of driving people back into the untraded sector. Moreover, it will undo much of the progress made in phasing out imported solid fuels. We appeal to the Minister for a commonsense approach, which would maintain the status quo on carbon tax regarding domestic solid fuels, at least until the robust mechanism he suggested last year are outlined clearly and are implemented. We have seen what has happened in the oil, cigarette and alcohol industries with cross-Border smuggling over the years and do not want something similar to happen in respect of solid fuels. If a carbon tax is to be implemented at some future date, we suggest that this be done over a period of years, thereby allowing for a smooth transition, locally and nationally. Even as matters stand at present, large quantities of high sulphur content solid fuel are avoiding VAT and are being brought across the Border on a daily basis. We also have evidence from our members proving that some merchants in Northern Ireland accept legitimate VAT numbers from customers for other products, including timbers for roofing houses, bathroom suites and other large value items, without substantiating the customers’ right to use the VAT number. We are engaged in discussions with Revenue at present on both these matters.
We also ask the Minister for Finance to introduce a winter fuel smart card or voucher scheme so that those who are entitled to use them can purchase solid fuel products only and from registered tax compliance companies. At present, this allowance is paid by way of a top-up on the recipient's current payment and can be spent on anything and not exclusively on solid fuel. We would be happy to engage with the Government in exploring avenues on the practicalities and mechanics of building a robust mechanism. After all, we will be the industry that will be called upon to drive it. We are gravely concerned regarding the implications for our industry, were the carbon tax to be introduced on domestic solid fuels and regarding its potential impact on the 1,200 people who would be made redundant as a direct consequence. Let no one state he or she was unaware of this consequence after the event, as these facts now have been laid before the joint committee. My colleague, Mr. John Murphy, will summarise his points on prompt payment.
