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Fuel tax bill does not change phase-in plan for biodiesel.

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Wednesday, 28 June, 2006


“The fuel tax legislation passed by the Senate last Thursday will not change the existing arrangements for the phasing in

of effective fuel tax on the importation and manufacture of biodiesel,” Minister for Revenue and Assistant Treasurer,

Peter Dutton, said today.

“The legislation gives effect to the Government’s policy on alternative fuels as announced by the Government in 2004,”

Mr Dutton said.

“The Government’s policy is to establish a fairer, more transparent system with improved competitive neutrality between

fuels. The legislation will make businesses better off by reducing the incidence of fuel tax on business inputs,” He said.

“Biodiesel has enjoyed an effective tax rate of zero. While fuel tax has been imposed on biodiesel at the same rate as

diesel since September 2003, it has been fully offset by a cleaner fuels grant.”

“The Government’s generous transitional arrangements will maintain the effective fuel tax free treatment of biodiesel

until 1 July 2011, and on-road users of biodiesel will continue to receive an on-road alternative fuel grant until

30 June 2010,” he said.

When the maximum rate of fuel tax is imposed on biodiesel it will be at a 50 per cent discount to that imposed on fuels

with similar energy content such as diesel.

Eligible biodiesel users will qualify for a fuel tax credit equal to the effective fuel tax paid on biodiesel blends.

The legislation also corrects a loophole that has extended an unintended competitive advantage to certain blends

of biodiesel over other fuels in the off-road market, including pure biodiesel.

“The Government remains committed to the biofuels sector and has provided assistance through the Biofuels Capital

Grants programme, grants for on-road use of biodiesel, and favourable treatment through the tax system. This is intended

to encourage the development of a viable biofuels industry that will be able to compete on its commercial merits in the

longer term,” Mr Dutton said.

Media Contact: Brad Emery 02 6277 7360 - 0414 225 638

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