An MHK has called on the government to “level” the field for the haulage and agriculture sectors as they face fuel price increases on top of the additional costs of crossing the Irish Sea.
Ayre and Michael MHK Stephen Broad asked Treasury Minister Michael Crowe about the impact of fuel surcharges on the competitiveness of the island’s road haulage and agricultural sector.
Broad warned MHKs: “The real disadvantage for Manx hauliers and the agricultural sector is not simply fuel surcharges but the cost of crossing the Irish Sea.”
“What assessments has Treasury made of the disadvantages and what will government do to level that playing field?”
Crowe said: “Treasury and other departments are undoubtedly aware of the cost pressures and other pressures facing businesses in the Isle of Man keep these under constant review.
“The road haulage industry and agricultural sectors also have direct communication with the Steam Packet and discussions around the charges and I would hope that all parties would work together when difficult decisions have to be made.”
Treasury Flexibility
In response to the initial question, Crowe said Treasury had been monitoring fuel prices and the surcharges levied by the Steam Packet under the Sea Services Agreement.
He added: “Treasury’s flexibility around dividend expectations enabled the Steam Packet to hold Quarter 3 surcharge rates at the October levels, which were substantially below the levels that would have been required to offset the high costs of fuel experienced at that time”.
This move by the Steam Packet, he said, “contributed to valuable breathing space for importing and exporting businesses, at a time where surcharges were being applied in the UK and elsewhere by both road haulage businesses and ferry and other transport companies”.
He said the situation would be kept under review, mindful of the need for the island to maintain competitiveness.
Listen to the full exchange here:
Help Local Businesses
Glenfaba and Peel MHK Katryna Baptist also quizzed Crowe on what he planned to do to “alleviate the effects on local businesses, including the road haulage and agricultural sectors” of rising fuel costs.
“Treasury cannot influence the wholesale price of fuel and we are limited in its ability to insulate businesses and residents from global pressures,” he said.
A set of principles was required when considering whether to intervene in the market.
He added: “These have previously included ensuring that support had a clear end date, assisted with long-term resilience, and was targeted to those in most critical need, rather than being broad brush in nature.
“Treasury and the Government as a whole will continue to develop these principles and be prepared to intervene when it is in the best interest of the Manx taxpayer.”
Baptist also highlighted issues facing the fishing industry and sought information on what was being done for that industry and other businesses to support them.
Her constituency colleague Daniel Davison highlighted the effect on the farming sector and the ultimate impact on food security.
Action Not Words
Baptist remarked: “I have heard lots of warm words today and I feel reassured that there is much monitoring that is taking place, but that really doesn’t pay the bills for these people.
“At what point will action be triggered rather than just meeting and talking about it?”
Crowe said his words represented action by the Treasury. “We all want to see the same aim.
“All government departments take this matter very seriously.
“If necessary, we would be prepared to intervene.”
You can listen to these points and Crowe’s outline of the action taken already, here:
No Windfall
Broad had earlier asked what the Treasury’s plans were to use the “windfall VAT revenue” generated from the increase in road fuel prices.
Crowe acknowledged the increase was creating additional costs.
But he said: “The suggestion that there is an identifiable VAT windfall arising from higher fuel prices which Treasury can simply use to fund support for specific businesses is not realistic as it does not take into account wider factors that affect VAT revenues overall.”
The island’s VAT income was not based on fuel alone, he added.
“VAT receipts reflect spending across the economy as a whole.
“While higher fuel prices may mean that more VAT is collected when somebody fills their vehicle, that does not necessarily mean that overall VAT receipts increase by the same amount.”
Broad said the government should not be “benefiting from the very costly increases that are hurting Manx businesses”.
He said the UK had taken “considerably more steps” than the Isle of Man in terms of assisting those affected by increases.
Crowe said Treasury could not isolate the VAT paid on road fuel and assume it represented an equivalent increase, immediately, in the island’s overall VAT revenue.
You can hear the full discussion on that question here:
