The U.S. Senate voted 73 to 27 today to repeal the federal subsidies for ethanol, a vote that will have no immediate effect but probably signals the eventual end of a tax break that was politically popular in much of the country and drove corn production to the point that two of every five bushels are now used to make ethyl alcohol for blending with gasoline.
"The prospects for repealing the tax credit in the House are shaky, Michael Cohn of Accounting Today reports. "It is opposed by many farm state lawmakers whose constituents benefit from the tax credits for corn-based fuel additives. Sen. Charles Grassley, R-Iowa, who has led opposition to the measure, said on the Senate floor that the bill was not likely to even be voted on in the House. . . . However, the tax credit repeal may be included as part of a larger deficit reduction deal." (Read more)
UPDATE, June 18: In the wake of the vote, "Ethanol producers are offering to let Congress end the industry's 45-cent-per-gallon tax credit ahead of schedule so some of the savings can be put toward installing pumps and storage tanks needed to increase the amount of ethanol being sold by service stations," reports Bilip Brasher of The Des Moines Register. "With Congress committed to cutting the federal deficit, waiting until the end of the year in hopes of finding another source of money for the industry isn't an option, said Tom Buis, CEO of Growth Energy, an industry trade group." (Read more)
"The prospects for repealing the tax credit in the House are shaky, Michael Cohn of Accounting Today reports. "It is opposed by many farm state lawmakers whose constituents benefit from the tax credits for corn-based fuel additives. Sen. Charles Grassley, R-Iowa, who has led opposition to the measure, said on the Senate floor that the bill was not likely to even be voted on in the House. . . . However, the tax credit repeal may be included as part of a larger deficit reduction deal." (Read more)
UPDATE, June 18: In the wake of the vote, "Ethanol producers are offering to let Congress end the industry's 45-cent-per-gallon tax credit ahead of schedule so some of the savings can be put toward installing pumps and storage tanks needed to increase the amount of ethanol being sold by service stations," reports Bilip Brasher of The Des Moines Register. "With Congress committed to cutting the federal deficit, waiting until the end of the year in hopes of finding another source of money for the industry isn't an option, said Tom Buis, CEO of Growth Energy, an industry trade group." (Read more)
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