NAFA Cheers for Extension of Alternative Fuels Excise Tax

Along with the tax incen­tive for fleets on equip­ment pur­chas­es that extend­ed a “bonus dep¬re¬ca¬tion” that had expired on Dec. 31, there was more good news on res­o­lu­tion of the “fis­cal cliff” cri­sis in Wash­ing­ton. NAFA Fleet Man­age­ment Asso­ci­a­tion applaud­ed the bill signed into law on Jan­u­ary 1 that con­tained the Exten­sion of Alter­na­tive Fuels Excise Tax. This incen­tive helps just the use of biodiesel and alter­na­tive fuel vehi­cles for thou­sands of fleets. The bill includ­ed a con­tin­u­a­tion of a $1 per gal­lon tax cred­it for biodiesel and a $0.50 per gal­lon alter­na­tive fuel tax cred­it for nat­ur­al gas and propane auto­gas through­out 2013. The bill also retroac­tive­ly cov­ers fuel pro­duced in 2012 after the tax cred­it had expired. “This tax cred­it is very impor­tant to fleet man­agers, who have typ­i­cal­ly been the ear­ly adopters of alter­na­tive fuels,” said NAFA Exec­u­tive Direc­tor, Phillip Rus­so. “In recent months, NAFA urged mem­bers whose fleets were impact­ed by these cred­its to con­tact their elect­ed offi­cials in Wash­ing­ton, D.C. The rein­state­ment proves that there is strength in num­bers.”

The biodiesel cred­it is reflect­ed in the price a fleet pays for fuel, and thus is a sig­nif­i­cant fac­tor in pro­ject­ing fuel costs. The $1-per-gal­lon biodiesel tax incen­tive was first imple­ment­ed in 2005. Con­gress allowed it to lapse in 2010 and again in 2012. With­out the tax incen­tive, biodiesel is sig­nif­i­cant­ly more expen­sive than con­ven­tion­al diesel fuel – mak­ing it more dif­fi­cult to make the busi­ness case for biodiesel.

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