A taxing compromise

The Ministry of Finance and the Ministry of Agriculture have reached a compromise on biofuels after a four-month conflict over the issue. According to the proposals worked out during a meeting of the Sejm's Public Finances Committee, the biofuel excise-tax exemption will remain almost unchanged, while farmers will receive state subsidies to grow rapeseed.

In the case of gasoline, the excise exemption for bio-components will grow from zł.1.5 per liter to zł.1.56, and in the case of oil it will increase from zł.1 to zł.1.08. Self-defense (SO) - a proponent of higher exemption rates (zł.1.88 for oil with bio-components) - has accepted the proposal, but not without gaining something in return. Every farmer growing rapeseed will now get zł.176 per hectare, in addition to the R45 (zł.172) they receive from EU funding. The Ministry of Finance estimates that the subsidies will cost the budget around zł.90 million.

SO leader Andrzej Lepper said that the changes "are solutions that met our expectations." However, he added that the subsidies are still too small in comparison to the growing production costs, but underlined that there is a will in the coalition to resolve the problem.

Biofuels became a source of conflict within the government coalition in January when the Finance Ministry decreased the excise-tax exemptions to adjust them to EU regulations. Two weeks ago Lepper threatened that if the biofuel issue is not solved by the end of April, the party would leave the government coalition.

The bill will come into force seven days after it is accepted by the European Commission, which could take between two and three months.