3 Februar 2006

German Government to Tax Biodiesel in 2006

German Finance Minister Peer Steinbrueck plans to impose new taxes on biodiesel fuel from August 1, the newspaper Berliner Zeitung reported on Thursday.

Draft legislation on energy taxes includes a new 10-euro-cent (12 cents) per litre tax on biodiesel fuel, largely made from rapeseed oil, the newspaper said.

A 15-euro-cent per litre tax would be imposed on biodiesel blended with conventional diesel at oil refineries. A new tax of 15 euro cents per litre would also be imposed on other unrefined vegetable oils which vehicles use as fuel, it said.

Biodiesel has so far been exempt from the heavy taxes imposed on fossil fuels, but purchasers have had to pay the usual VAT. The new taxes will be in addition to that.

The coalition agreement for Germany’s new Conservative-Social Democrat government says special tax exemption for biodiesel sold at petrol stations should be ended.

The tax break would be replaced by compulsory blending of biodiesel with conventional diesel at oil refineries.

The Finance Ministry said in December taxes would rise as stated in the coalition agreement, but since then the government has said almost nothing about its plans.

Tax rises are opposed by farm and biofuel associations, which fear a sharp drop in biodiesel sales and so reduced demand for rapeseed to produce it.

German farmers’ association DBV on Thursday criticised the tax rise as “inappropriately high”.

The tax would reduce investment in new biodiesel and vegetable oil production plants in Germany, it said in a statement.

This could mean Germany would have to import biofuels in future if the government wanted to increase their use, the DBV said.

Surging oil prices meant German biodiesel consumption rose to an estimated 1.8 million to two million tonnes in 2005 from 1.1 million tonnes in 2004. This caused the government a heavy cut in tax revenues from conventional diesel.

Steinbrueck’s draft must also be approved by other ministries. The newspaper quoted the draft as saying the plan would “provide an entry into taxation of biofuels.”

It would generate 130 million euros of new tax revenues in 2006 and 370 million euros in 2007, the report said.

Earlier this week, German Agriculture Minister Horst Seehofer said he did not expect a decision on biodiesel tax until next year.

Source: Planet Ark Feb. 03, 2006.

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