VAT Must Be Paid on Bridge Toll

The European Court of Justice has ruled against the UK Government in a move which will add 1 in VAT to tolls on the Skye Bridge. The court agreed with a previous ruling that the UK is breaching EU regulations by not applying VAT to road and bridge tolls. The decision forces the UK Government to bring in VAT on tolls, some of which will be passed to the EU.

The government is also facing the prospect of a huge back-payment, with up to six years of unpaid taxes and interest. The European Commission took the UK Government to the European Court of Justice for not applying VAT to road and bridge tolls. The government had fought for an exemption, arguing that VAT should not apply to publicly-run projects. However, the judges decided that the UK must comply with EU law and apply VAT.

Tolls must now be increased by 17.5% on the controversial Skye Bridge - a decision which poses a problem for the Scottish Executive. It has pledged to freeze tolls on the Skye Bridge, which have been staunchly opposed by islanders, for the duration of the contract (see previous news story and here). Tolls currently stand at 4.70 in winter and 5.70 in the summer. They could be increased by as much as 1.

It will also cost around 100 for a holiday coach operator to get on and off the island. The RAC says it could mean the difference between survival or extinction for rural communities. Island councillor Drew Millar said it was a nightmare, while Robbie the Pict described it as a tax on extortion. And MSP John Farquhar Munro said the government should now buy out the bridge contract and end the saga.

However, the decision will not add to the cost of crossing the Erskine, Forth and Tay road bridges. The ruling only applies to toll bridges run by private companies and not those operated by public authorities.  So, yet again, the people of Skye have yet another tax thrust upon only them.

The UK Government has asked Customs and Excise to hold urgent consultations with private operators aimed at coming up with a scheme which would offset the costs of VAT so the rise is not passed on to drivers.

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Copyright Ray Shields, 2000.

Most recent revision, 13 September 2000