Tax Breaks for Biofuels

December 18, 2008 New Zealand Taxation  No comments

In a speech made by Energy and Resources Minister Gerry Brownlee to parliament, the use of tax breaks as incentives has been proposed to increase the use of biofuels in New Zealand.

The key concern of the speech was to repeal a Labour government passed law which stated that by the year 2012 2.5% of the petrol and diesel market be sourced from biofuel. Garry Brownlee said that although there were a number of exciting biofuel projects in New Zealand, the amount was not enough to meet the law requirement. Subsequently, this would require fuel companies to import increasing amounts of biofuels and as it is sourced from overseas there is no guarantee that it will be done so from renewable or sustainable resources.

The current implementation of some biofuel productions competes directly with the space needed for food production. This can have the effect of raising food prices, a move that the government does not want to support.

Gerry Brownlee stated that a more productive solution would the implementation of a tax-incentive, which would see reward for bio-fuels. Specifically the scheme would see a tax discount based on the percentage blend of bio-fuel, whereby a 10% blend in fuel would see a 10% drop in excise and road user charges.