Senate Votes to End
Ethanol Tax Breaks
The U.S. Senate passed legislation June 16 calling for the repeal of tax credits and tariffs for ethanol production. In a 73-27 vote, more than half of the Senate's Republicans joined Democrats in approving an amendment to end a 45¢-per-gallon subsidy for ethanol plants and a 54¢-per-gallon tariff on imported ethanol. The subsidies, amendment proponents argue, have been a significant driver in higher corn prices.
"The VEETC (Volumetric Ethanol Excise Tax Credit) and the tariff on imported ethanol have put cattlemen and other end-users of corn at a competitive disadvantage to the corn-based ethanol industry when it comes time to buy a bushel of corn," said Bill Donald, president of National Cattlemen's Beef Association (NCBA). "Repealing the VEETC and the import tariff are important steps to fully leveling the playing field."
Now the amendment, introduced by Senators Dianne Feinstein (D-Calif.) and Tom Coburn (R-Okla.), will advance as part of an economic development bill.
According to The Wall Street Journal, however, even if the Senate approves the measure, the House is unlikely to take up the legislation.
Groups like the Renewable Fuels Association (RFA) and Advanced Ethanol Council released statements dismissing the amendment as political maneuvering in opposition to President Obama's domestic energy policy and efforts to reduce dependency on foreign oils.
Agriculture Secretary Tom Vilsack likewise expressed USDA's disapproval of the Senate action. "The Administration supports efforts currently under way in the Senate to reform and modernize tax incentives and other programs that support biofuels. However, today's amendments are not reforms and are ill-advised," Vilsack said. "We need reforms and a smarter biofuels program, but simply cutting off support for the industry isn't the right approach."
Meanwhile, with tight corn supplies and high prices, cattle organizations like NCBA continue to support an end to ethanol subsidies.
"Cattlemen aren't opposed to ethanol. In fact, we support our nation's commitment to reducing our dependence on foreign oil. But after 30 years and more than $30 billion in taxpayer support, the day has come to let the mature corn-based ethanol industry stand on its own two feet," Donald said.
That day may come soon. While today's vote is unlikely to become law, Bloomberg reports the amendment more significantly spells trouble for an ethanol industry trying to extend support beyond Dec. 31 — when subsidies are set to expire.
