Report finds 112,000 jobs at risk without ethanol tax extension

Failure to extend the Volumetric Ethanol Excise Tax Credit (VEETC) would reduce U.S. ethanol production capacity by 38% and eliminate tens of thousands of jobs, according to a new report prepared by economist John Urbanchuk, Technical Director at ENTRIX, and commissioned by the Renewable Fuels Assn.

The report found that by extending tax incentives for ethanol made from all types of feedstocks, 112,000 jobs could be saved from being lost. That is nearly 30% of the 400,000 jobs ethanol production helps support today. The report also estimates a reduction of household income by $4.2 billion (2009 dollars) if an extension is not enacted.

The RFA is advocating for a long term extension of VEETC, the Small Producers Tax Credit, the Cellulosic Ethanol Tax Credit, and the offsetting tariff on imports. According to the study “Importance of the VEETC to the U.S. Economy and the Ethanol industry,” failing to extend the tax incentive would idle 4.56 billion gallons of production, in addition to the ~1 billion already idled, based upon the 2010 expectation of 12 billion gallons of domestic ethanol production.

“Without tax incentives to support domestic production, the Renewable Fuels Standard by itself will simply allow increased US dependence on imported biofuels – a result that will undermine the US ethanol industry and contribute to additional job losses,” said Bob Dinneen, RFA president.

The RFA said in a statement that "in a climate of economic uncertainty and growing budget deficits, the tax incentives for ethanol are one program that routinely pays for itself. In 2009, the outlay from the Federal Treasury for VEETC and the Small Producer Tax Credit totaled $5 billion. By comparison, the Federal Treasury saw $8.4 billion in increased revenues from the ethanol industry – a net positive return of $3.4 billion. This doesn’t include tens of billions in increased state and local taxes, increases in household income, and savings resulting from fewer imports of oil."

source: feedstuffs