The House ways and means approved the Bioethanol Fuel Act of 2005 with changes to tax perks recommended by the finance department.

The bill now goes to the House energy committee for further deliberation. If it passes muster, the House of Representatives will be asked to approve the measure, aimed at reducing the country's dependence on fossil fuel.

Legislators agreed to the Department of Finance's (DoF) suggestion of a 1% import duty on machinery and equipment used by bioethanol plants.

In the original measure, all firms engaged in the production of bioethanol or ethyl alcohol, were to be "exempted from the payment of tariff and duties in the importation of all types of inputs, machinery, and equipment."

The Finance department nixed the proposal, saying the government has a policy directing a minimum duty if 1% for its handling and supervision. It has yet to compute the estimated revenues from the handling fees.

Bukidnon Rep. Juan Miguel F. Zubiri, one of the bill's authors, said they agreed to the Finance proposal because the revenue will go to the government. He also said the tax is not much of a burden to bioethanol firms.

"I don't think it's unreasonable…it's a onetime tax payment anyway," Mr. Zubiri said.

The Finance department also asked legislators to review a provision calling for an excise tax rate for bioethanol fuel at the prevailing rate for unleaded gasoline for a period of 10 years. The current line for a period of 10 years. The current excise tax for gas is P 4.35 per liter.

Mr. Zubiri said legislators are awaiting a final suggestion from the Finance department, which will be acted upon by the House energy committee. He said Finance officials have proposed imposing a specific tax rate of P 4.35 liter or less.

The Finance department has also tempered its objection to including bioethanol projects in the Investments Priorities Plan (IPP) to qualify for incentives. It is now open to its inclusion in the National Energy Program which is also under the IPP.

"The route limits the capability of government to map out an industrial development path for the government consistent with the goals and strategies of the Philippine Development Plan," the department had said in a position paper.