Agricultural News
Oklahoma Senator Tom Coburn Offers Repeal to VEETC Subsidy for Ethanol
Wed, 09 Mar 2011 14:16:58 CST
U.S. Senators Tom Coburn, M.D. (R-OK) and Ben Cardin (D-MD) today introduced a bill to save taxpayers $6 billion by repealing the costly and ineffective Volumetric Ethanol Excise Tax Credit (VEETC) or "blenders tax credit," which provides .45 cents per gallon to blenders of ethanol. Last week, the Government Accountability Office (GAO) released a report describing the tax credit as "largely unneeded today to ensure demand for domestic ethanol production." Click here for the GAO report that includes the Agency's take on this tax credit for ethanol.
"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. 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," Dr. Coburn said.
"As our economy begins to grow again, we need to bring our budget under control through a combination of smart cuts and smart investments. 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," said Senator Cardin.
Senator Coburn adds that while there are a wide range of federal incentives available for ethanol production, the VEETC essentially provides free money for blenders who are already mandated by the Renewable Fuels Standard (RFS) to blend ethanol in fuel.
Moreover, while born of good intentions, federal subsidies for ethanol have had less than satisfactory results. Ethanol-blended fuel is nearly a third less efficient than gasoline (ethanol burns at 68 percent the energy content of gasoline), has contributed to the increased price of corn (as well as land, feed, and other input costs), and can cause engine damage in motor vehicles.
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Meanwhile- groups that are suppoortive of ethanol are reacting with dismay over the Coburn-Cardin measure.
Today Bob Dinneen, President and CEO of the Renewable Fuels Association, commented on legislation introduced by U.S. Senators Tom Coburn, M.D. (R-OK) and Ben Cardin (D-MD) which called for the elimination of the Volumetric Ethanol Excise Tax Credit (VEETC).
"At a time of rapidly rising gas prices which threaten a fragile American economic recovery, it makes no sense to deprive Americans of a lower cost choice at the gas pump or to stop America's investment in an American-made, job-creating alternative to foreign oil. If recharging our economy is a top fiscal and economic priority for these Senators then Job One should be redirecting the $1 billion a day we spend on foreign oil back into the U.S. economy. Ethanol is part of the solution, not the problem."
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