The Hagstrom Report

Agriculture News As It Happens
Navigation

Ethanol groups back variable tax credit bill

In a signal of increasing trouble for the ethanol industry’s tax breaks, the Renewable Fuels Association, Growth Energy and the National Corn Growers Association all issued news releases Monday opposing the amendment by Sen. Tom Coburn, R-Okla., and endorsing the bill introduced by Sens. John Thune, R-S.D., and Amy Klobuchar, D-Minn., to make the ethanol tax credit dependent on the price of oil beginning July 1.

Coburn’s bill would immediately repeal the Volumetric Ethanol Excise Tax Credit (VEETC) and end the tariff on imported ethanol. The Coburn amendment on ethanol is scheduled for a vote on the Senate floor this afternoon.

“This rifle shot approach is fiscally irresponsible and shortsighted,” said Growth Energy President Jim Nussle, a former director of the Office of Management and Budget. “We don’t have to choose between reducing our nation’s deficit and investing in our energy future. With ethanol, we can do both.”

The Thune-Klobuchar bill would implement a variable tax credit, with the rate to be based on the price of oil, beginning July 1 and to expire at the end of 2014. The bill would extend the alternative fuel station tax credit, which would allow for more consumer freedom to purchase higher concentration of ethanol, and would extend the small producer ethanol credit through 2014.

Of the $2.5 billion in revenues that the government would receive from changing the tax credit, $1 billion would be earmarked for deficit reduction.

The Thune-Klobuchar bill has 13 Senate co-sponsors, including Sen. Charles Grassley, R-Iowa, who introduced a bill in May that would phase out the VEETC after its scheduled expiration at the end of this year.

In a news release, the corn growers said, “Due to increasing budget concerns, the ethanol industry and this bipartisan group of senators felt the need to review potential savings of moving towards reform immediately.”