Florida Tax laws and Bio-diesel

Students at the University of Central Florida are using their own small experimental bio-diesel reactor to avoid the growing costs of gasoline.  This fuel, made from fryer grease and chemicals, costs about 1/5 of the price of regular gas, and burns cleaner than petroleum-based diesel and produces less CO2 than diesel or gas (anyone know how to put subscripts into WordPress?).  They are also donating some of their fuel to their school. earning a tax break from the donation.

What was most interesting to me about the article however, was not the non-disclosure of the bio-diesel recipe or equipment.  It was not the implications of possible widespread use of this fuel.  It was not even the potential benefit to the environment through better, cleaner fuels.  It was the tax implications for the production of such a fuel.  Florida state, like many other US states, has a substantial excise tax fuel.  Excise tax is a tax for the production of goods – you make it, you pay it.  I would guess that in a typical situation, this sort of tax would not affect individuals.  Excise tax is only commonly imposed on certain goods like tobacco and alcohol.  So if you ferment your own cider, you might owe something to your state government.

However, I would think it’s likely that most small producers who don’t sell the goods wouldn’t suffer for not paying the tax.  Such small production has a minuscule impact on the local economy and tax revenue – usually.  However, with the shortage of gas and rising prices, this could mean big money that local governments aren’t getting, especially as more and more people turn to homemade bio fuels.  It may mean more money and certainly more annoyance for the consumers/producers.  The question is how much it will hamper local efforts for the production of a cleaner fuel, despite savings even with the tax paid out of pocket.