“Think globally, act locally.”

It’s the most fundamental principle of the modern environmental movement. But, for all the big talk from green politicians, government continues to block individuals from taking the small steps that will ultimately save the planet. Nowhere is this problem better demonstrated than in the state’s tax regulations of bio-fueled vehicles.

Bio-fuels, which include even that leftover fryer grease from McDonalds, are one of the most promising carbon neutral alternatives to fossil fuels. The LA Times reports that as many as 250,000 vehicles nationwide run on used cooking oil. In Orange County, Beach Benz has capitalized on the idea by offering vegetable oil conversion kits for its customers. Last year, state and local media outlets profiled the environmentally responsible actions of Dave Eck, a Bay Area mechanic who converted his Hummer to run on used vegetable oil.

In Eck’s case, he received too much attention. Proving the adage that no good deed goes unpunished, Board of Equalization auditors – after watching him on the news – fired off a nasty letter demanding payment of California’s 18 cent per gallon diesel fuel tax.

As Evan Halper explains in the LA Times, “The government rang to notify Eck that he was a tax cheat. He was scolded for failing to get a ‘diesel fuel supplier’s license’ reporting quarterly how many gallons of grease he burns, and paying a tax on each gallon.”

Like most taxpayers, Eck wasn’t trying to cheat the system; he just didn’t know that he owed the tax. The tax is so obscure that even Governor Schwarzenegger failed to pay the tax on his vegetable oil converted Hummer.

This week, the Board of Equalization had the opportunity to correct this incoherent tax policy by exempting biofuels from the diesel fuel tax. Sadly, I was on the losing side of a 4-1 vote. California shouldn’t waste its time with this biofuel diesel tax because (1) it costs taxpayers more money to collect than it generates in revenue, (2) it stifles innovation, and (3) it hurts the environment.

It is illogical for the state to spend time and resources enforcing a tax that costs more to collect that it generates in revenue. The EPA estimates that the average passenger vehicle is driven 12,000 miles per year. Assuming the fuel efficient veggie oil vehicle gets just 30 miles per gallon, the state would collect just $72 per year in diesel fuel taxes.

Compare $72 in tax revenue with the cost to taxpayers to collect the money. The state pays an associate tax auditor, like the one who tracked down Eck, $43.76 per hour in pay and benefits. After just two hours, the state has spent more tax money than it collected. Don’t forget to add in the time it takes to process the diesel fuel supplier’s license application and the annual tax return. Additionally, the state requires a license from the state Meat and Poultry Inspection Branch in order to transport kitchen grease. The net result is a cost to the state.

Green technologies can only save the planet if people use them. Why would anyone convert to a vegetable oil engine if they were forced to file additional tax returns, register with multiple different state agencies and be at an increased audit risk? And those who did peddle in the underground veggie fuel market surely wouldn’t share their green ideas on the evening news.

It’s great to hear big talk about green jobs and stopping global warming. The state should match that green gusto with a green tax policy on biofuels. It’s time for government to take its carbon footprint off the neck of innovation.