House Bill Extends U.S. Ethanol Tax Breaks To 2016

WASHINGTON – Under a bill proposed last week by two dozen lawmakers, the federal government would extend ethanol tax breaks and a tariff on imports until 2016.

Without Congressional action, three of four current incentives will expire at the end of this year. Proponents maintain that a long-term extension will assure a home-grown fuel supply and bring cellulosic ethanol into commercial production.

However, foodmakers, meatpackers and environmentalists attacked the bill as a “wasteful subsidy” that would increase food prices by using food crops to produce fuel.

Critics estimated the tax breaks at $6 billion a year, which include a 45-cents per gallon tax credit for gasoline blenders, a 54-cents per gallon tariff on imports, a $1.01 per gallon credit to cellulosic ethanol producers, and a 10-cents per gallon small-producer tax credit.

Rep. John Shimkus, a lead sponsor of the bill, said that the move would be “the biggest thing we have done” to reduce reliance on imported oil.

Farm groups and ethanol trade groups said that ethanol pays for itself through lower gasoline prices and lower crop subsidies. They said that if the 45-cent blender credit were rescinded, “nearly two out of every five ethanol biorefineries operating today would be forced to shutter."

The blender credit, ethanol tariff, and small producer credit expire at the end of this year, and the cellulosic credit expires at the end of 2012.

source: nasonline