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CLAUSE 2: HYDROCARBON OIL (REBATE ON UNLEADED PETROL)
SUMMARY
1.
This clause removes the separate, effective rate of duty for higher
octane unleaded petrol (also known as lead replacement petrol (LRP)
or super unleaded petrol). This change took effect from 6 pm on 7
March 2001.
DETAILS OF THE CLAUSE
2.
Subsection (1) substitutes a new section 13A for the existing
section 13A of the Hydrocarbon Oil Duties Act 1979. The new section
provides for a rebate of duty on unleaded petrol, other than ultra-low
sulphur petrol, charged with the excise duty on hydrocarbon oil and
delivered for home use. This new section does not provide for the
rebate of duty previously allowed for higher octane unleaded petrol.
3.
Subsection (2)(a) substitutes a new sub-paragraph (ab) for
the existing sub-paragraphs (a) and (b) of paragraph 1(1) of Schedule
2A (mixing different kinds of unleaded petrol) to the Act. The new
sub-paragraph (ab) makes it a contravention under paragraph 1 if leaded
petrol is produced by the addition of lead to unleaded petrol in respect
of which a rebate has been allowed under section 13A of that Act.
4.
Subsection (2)(b) makes a consequential amendment to paragraph
1(1)(c) of Schedule 2A to the Act.
5.
Subsection (3) substitutes a new paragraph 2A for the existing
paragraph 2A of Schedule 2A to the Act. The new paragraph 2A provides
that it is a contravention under this paragraph if unleaded petrol,
that is not ultra-low sulphur petrol, is produced by mixing ultra-low
sulphur petrol and unleaded petrol, in respect of which a rebate has
been allowed under section 13A of the Act.
6.
Subsection (4) substitutes new sub-paragraph (3A) for existing
sub-paragraph (3A) of paragraph 8 of Schedule 2A to the Act. The new
sub-paragraph provides for the rate at which the duty shall be charged
on a mixture that is produced in contravention of paragraph 2A (mixing
different kinds of unleaded petrol). That rate is calculated by deducting
from the rebate under section 13A of the Act that is in force when
the mixture is produced from the rate for light oil (that is not ultra-low
sulphur petrol) that is in force at the time the mixture is produced.
7.
Subsection (5) provides for the changes to take effect from
6 pm on 7 March 2001.
BACKGROUND
8.
This clause effectively abolishes the higher duty rate for higher
octane unleaded petrol. The old section 13A of the Hydrocarbon Oil
Duties Act 1979 provided for separate rebates of duty on unleaded
petrol (other than ultra-low sulphur petrol) and higher octane unleaded
petrol, as defined within the Act. The new section 13A only provides
for a rebate of duty for unleaded petrol (other than ultra-low sulphur
petrol). The effect of this clause is that the duty on unleaded petrol
is now dependent only on the sulphur and aromatics content of the
fuel. Subsections (2), (3) and (4) of this clause make consequential
amendments to Schedule 2A of the Act (mixing different kinds of unleaded
petrol), removing references to higher octane unleaded petrol from
the Schedule.
9.
A recent DETR environmental assessment confirmed that use of higher
octane unleaded petrol does not cause significant environmental concerns
over and above use of lower octane fuels.
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The Government recognises that many people driving older cars are
unable to afford newer vehicles and become locked into buying LRP
and has therefore abolished the separate rate for higher octane fuels.
Duty will now be charged on this fuel at the rate appropriate to unleaded
petrol or ultra low sulphur petrol dependent upon the sulphur and
aromatics content of the fuel. The RON and MON rating which previously
defined higher octane fuel is no longer relevant for duty purposes.
11.
The Government is encouraging the uptake of cleaner ultra low sulphur
fuels by reducing the duty rates. The rate for ultra low sulphur
petrol has been cut by 2 pence per litre. This will now also provide
an incentive to reduce sulphur levels in higher octane fuels.
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