Monday, August 13, 2007

[PBN] Japan: Preferential tax eyed for biofuel


The Yomiuri Shimbun

The Economy, Trade and Industry Ministry said Saturday it plans to
introduce a new preferential tax system in fiscal 2008 aimed at
promoting a wider use of biofuel, which could help curtail greenhouse
gas emissions.

The new tax plan is aimed at reducing carbon dioxide emissions from
vehicles, one of the causes of global warming, and will be incorporated
in a joint request to be submitted to the government's Tax Commission by
the ministry together with the Agriculture, Forestry and Fisheries, and
Environment ministries. The commission is expected to discuss the new
tax with a view to including it in tax revisions for 2008.

Under the envisaged plan, biofuel that has been mixed with gasoline will
be exempt from the gasoline tax--currently 53.8 yen per liter--in
proportion to the amount of biofuel included. If blended with diesel
oil, biofuel will be free from the diesel oil delivery tax, currently
32.1 yen per liter.

For example, gasoline that contains 3 percent of bioethanol would be
taxed 1.61 yen--3 percent of 53.8 yen--less than the per-liter price of
pure gasoline. Currently, there is no tax break for gasoline mixed with
biofuel, regardless of the ratios involved.

The price of bioethanol is slightly higher than that of gasoline.
Working under the assumption that gasoline is 145 yen per liter and the
import price of bioethanol is 10 percent higher than that, the price for
a liter of fuel containing 3 percent biofuel would be 0.43 yen more
expensive than 100 percent gasoline.

However, if the amount of biofuel mixed into gasoline is nontaxable, the
price of the composite fuel in this case would be 1.18 yen cheaper.

At present, the amount of biofuel that can be mixed into gasoline and
diesel oils domestically has an upper limit of 3 percent. However,
future technological innovations that would enable a higher quantity of
biofuel to be mixed with fossil fuels likely would reduce the price of
composite fuels.

The new green tax system--which applies a preferential tax to fuels,
unlike the green tax for automobiles that lowers the automobile tax on
fuel-efficient vehicles--is aimed at promoting a wider use of biofuel.
(Aug. 12, 2007)
Check for earlier Pacific Biofuel posts:

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