The efficiency effects of removing the diesel fuel rebate scheme

The diesel fuel rebate scheme which returns most of the excise on diesel fu el used off-road by agricultural and mineral producers has been debated. Re moval could cause three inefficiencies (input choice distortion, deadweight losses on reduced exports, and flow-on inefficiencies in domestic processi ng) and two efficiencies (from reducing other tares and savings an administ rative and compliance costs). Empirical studies suggest high net efficiency costs from removal, but while business input taxes have no place in an eff icient taxation structure, a small reduction in the rebate could yield some revenue at a low marginal deadweight loss.