German Parties Reach Deal on 9 Cent Biodiesel Tax
Date: 31-May-06
Country: GERMANY
Under a draft law unveiled in March, Finance Minister Peer Steinbrueck sought to impose a tax of 10 cents on biodiesel fuel and a tax of 15 cents per litre on both biodiesel used for blending with conventional fuels and on unrefined vegetable oils.
But that plan became a source of conflict within the ruling coalition of conservatives and SPD, forcing changes.
Reiche said that under the new deal vegetable oils would remain tax-free. Biodiesel used for blending would be taxed at 15 cents per litre, in line with the draft legislation from March.
Surging oil prices pushed German biodiesel consumption up to an estimated 1.8-2.0 million tonnes in 2005 -- nearly double its 2004 total.
This caused the government a heavy loss in tax revenues from conventional diesel.
Biodiesel has so far largely been exempt from heavy German taxes imposed on fossil fuels.
