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No more tax breaks for ethanol in Australia

Posted by: Erik Bjornstad

No_more_tax_breaks_for_ethanol_in_AustraliaThe United States isn't the only country wrestling with controversy over government subsidies and tax breaks over biofuels like ethanol.

Now, the government of Australia has announced that, starting in July 2015, there will no longer be a tax break for ethanol producers. Naturally, spokespersons for the Biofuels Association in Australia are "deeply disappointed".

Currently, Australia produces about 110 million gallons of ethanol from its three domestic ethanol plants, in addition to the volume it imports. Imported ethanol is taxed at a rate of about $1.50 a gallon. Up till now, those who produced and supplied ethanol for transport use in Australia were eligible to receive a full rebate of this tax - essentially a $1.50 a gallon bonus to help offset their costs. All of that will be going away in 2015. This will save the Australian government about $120 million over six years.

The Biofuels Association of Australia fired back at the news by noting that the existing subsidies actually net the Australia economy about $440 million a year across multiple areas. And they're unhappy because, they argue, groups have invested hundreds of millions of dollars into the ethanol industry because of these subsidies already in place. So, they argue, it's kind of like a bait and switch, pulling the rug out from under these groups who were counting on tax help to make things work.

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This post was published on July 15, 2014 and was updated on January 21, 2016.

Topics: Ethanol, Fuel Policy