THE European Commission (EC) has referred Ireland to the European Court of Justice for its failure to implement EU rules on marked, or 'coloured', fuel.
The EC is unhappy that the Government has allowed private leisure crafts to continue to use cheaper marked fuels that benefit from a reduced tax rate - a breach of European laws.
The Commission said it had written to Ireland in April of this year about the issue with instructions to change legislation to ban the use of the coloured fuel by owners of private leisure crafts.
The Commission has also warned that boats illegally using the coloured fuel risk facing fines and penalties if they travel into other European jurisdictions.
The Department of Finance said the pleasure craft industry maintains that the only fuel available to it is marked fuel and so a "special arrangement" was put in place with craft owners paying tax based on the difference between the regular fuel and marked fuel. A spokesperson said this is "the most feasible approach" to the issue, and is in place in the UK.
However, the Commission also said that while Irish law requires craft owners to pay Revenue based on the difference between the tax on marked gas and regular-priced gas, "the low number of tax returns indicates that the minimum level of taxation is not applied".
CEO of the Irish Sailing Association Harry Hermon said the move would seriously damage the industry and would put "lives at risk" as leisure sailors will now have to travel around with cans of diesel in vehicles due to supply issues with 'white diesel' along the coastline.