Senators Propose Alternative Ethanol Tax Credit Bill
Source: Accounting Today, Michael Cohn (5/4/11)
"Ethanol is the only alt energy notably reducing U.S. dependence on foreign oil."
A bipartisan group of Midwestern state senators introduced legislation Wednesday to update ethanol tax-credit policies but not repeal the tax credit.
The bill would provide an alternative to another bill introduced in the Senate on Tuesday aimed at eliminating the Volumetric Ethanol Excise Tax Credit.
Instead of getting rid of the tax credit completely, the bill introduced Wednesday—the Domestic Energy Promotion Act of 2011—would significantly reduce tax incentives for ethanol. It would extend, through 2016, at descending levels, the Volumetric Ethanol Excise Tax Credit or VEETC, which is also known as the blenders' credit. It also would extend, through 2016, the alternative fuel refueling property credit, the cellulosic producers' tax credit and the special depreciation allowance for cellulosic biofuel plant property.
The new bill was introduced by Sen. Chuck Grassley, R-Iowa, and Kent Conrad, D-N.D. The bill also has attracted the cosponsorship of Sen. Mike Johanns, R-Neb., Amy Klobuchar, D-Minn., Al Franken, D-Minn., Tom Harkin, D-Iowa, Tim Johnson, D-S.D. and Ben Nelson, D-Neb.
"Affordable energy is a major concern for Americans, and Congress needs to keep energy security on the front burner," Grassley said in a statement. "Now more than ever, it's time to ramp-up production of traditional energy sources here at home and expand alternative fuels and renewable energy sources. We've seen what ethanol can do, and the sky is the limit as we move to the next generation and cellulosic ethanol."
Sen. Tom Coburn, R-Okla., has introduced a series of bills that would completely repeal the tax credit, arguing that the $0.45/gallon tax credit is largely unneeded to subsidize the ethanol industry today and wastes $6 billion a year.