Critics take aim at bill to end ethanol tax credit

Washington-Sen. Tom Coburn’s (R-Okla.) recent amendment to immediately repeal the Volumetric Ethanol Excise Tax Credit (VEETC) in the small-business program reauthorization bill drew a critical response from the National Corn Growers Ass’n (NCGA) and the Renewable Fuels Ass’n (RFA) last week. The bill, introduced by Coburn and Sen. Ben Cardin (D-Md.), would end the “blenders tax credit,” which provides 45 cents per gallon to blenders of ethanol. Coburn says the repeal would save taxpayers $6 billion. “We are disappointed that Senator Coburn is singling out the ethanol industry in his amendment to immediately repeal the Volumetric Ethanol Excise Tax Credit while tax credits to the oil and gas industries remained untouched,” said NCGA President Bart Schott on March 16. “The American ethanol industry provides and supports 400,000 jobs here in the United States during a time of economic uncertainty. In addition, in the past year alone, ethanol added more than $50 billion to the national Gross Domestic Product and displaced the need for more than 360 million barrels of imported oil, valued at $16 billion.” Schott said the amendment’s passage “could result in the ethanol industry reducing its production volume by 38 percent. That is approximately 4 billion of the 10.75 billion gallons produced in 2009. This loss in ethanol production would result in the shedding of approximately 112,000 jobs in all sectors of the economy.” The NCGA’s comments were echoed by the RFA. “Given Sen. Coburn’s interest in what he deems unnecessary subsidies, we would encourage him to offer an amendment that would eliminate subsidies to oil companies posting tens of billions of dollars in profit quarterly,” a March 16 RFA statement said. “In lieu of that, the RFA urges the Senate to ignore this frivolous amendment.” RFA noted that Congress voted to extend the tax incentive for ethanol use just last December. “Reneging on that stability just four months after voting to provide it is the kind of job-killing, innovation-stalling policy that will keep America addicted to foreign oil,” RFA said. Coburn, in a statement released when the bill was introduced, called the ethanol tax credit “bad economic policy, bad energy policy, and bad environmental policy.” He said “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. I’m hopeful my colleagues on both sides of the aisle will take a stand against business-as-usual special interest giveaways and eliminate this wasteful and harmful subsidy.”