Md. Sen.: Repeal ethanol tax credit
A bill introduced Wednesday by senators Ben Cardin (D-MD) and Tom Coburn (R-OK) would kill a 45-cent per gallon tax credit to blenders of ethanol--generally, oil companies--in a move that could recover $6 billion for federal coffers. A Government Accountability Office report describing the tax credit as "largely unneeded today to ensure demand for domestic ethanol production."
"Cutting yet another subsidy to big oil that is making big profits is smart policy. Rather than underwriting ethanol subsidies that are causing food prices to skyrocket, we should be supporting American innovation in more sustainable alternative fuels the results of which will help create jobs, lower energy costs and strengthen our national security," Cardin said in a statement.
Policies enacted under the George W. Bush administration required extensive use of ethanol before advanced forms, including cellulosic, were viable. The result was a market-distorting subsidy, researchers and critics say, for inefficient corn-based ethanol and a shortage of corn that drove up food prices.
"President Bush had championed a forward-looking ethanol mandate that required levels that will become feasible only once advanced cellulosic ethanol hits the market. So far, efforts to meet the mandate have come almost entirely from corn. Largely as a result, corn prices have tripled, and the economic calculations on which corn-based ethanol plans were predicated no longer apply," I reported in 2008.
"The ethanol tax credit is bad economic policy, bad energy policy and bad environmental policy. The $6 billion we waste every year on corporate welfare should instead stay in taxpayers' pockets where it can be used to spur innovation, stimulate growth and create jobs," Coburn said, according to a statement.
"While there are a wide range of federal incentives available for ethanol production, the [Volumetric Ethanol Excise Tax Credit] essentially provides free money for blenders who are already mandated by the Renewable Fuels Standard (RFS) to blend ethanol in fuel," a statement from Coburn's office said.
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