US Senate passes huge tax relief bill with ethanol rescue

15 December 2010 19:09  [Source: ICIS news]

WASHINGTON (ICIS)--The US Senate on Wednesday approved an $858bn (€643bn) tax relief and stimulus bill that among other things would extend for one year the federal subsidy for corn-based ethanol and the corresponding protective tariff against imported ethanol.

The Renewable Fuels Association (RFA), a major ethanol trade group, hailed the Senate action and urged the US House of Representatives to approve the tax package as soon as possible.

The Senate passed the bill with an 81-19 vote.

While the main purpose of the tax relief measure was to extend for two years income tax cuts put in place during the administration of President George W Bush, the bill also included the ethanol subsidy and protective tariff provisions.

The subsidy, 45 cents/gal to refiners who blend corn ethanol into the nation’s motor fuel supplies, and the 54 cents/gal tariff on imports of foreign-produced ethanol, were to expire at the end of this year.

The tariff essentially makes imports of Brazil’s sugarcane-based ethanol non-competitive in the US market.

RFA president Bob Dinneen praised the Senate vote, saying the one-year extension of the subsidy and tariff would “provide the market stability allowing the industry to continue to grow”.

He said the one-year reprieve also gives the ethanol industry and Congress “breathing room to fully vet all the ideas on responsible reform of ethanol tax policy, including ideas on how to accelerate commercialisation of advanced and cellulosic ethanol technologies”.

Many in Congress, among environmental groups and in the US refining industry oppose continuing the subsidy for ethanol, arguing that it costs taxpayers some $6bn annually and does little to aid the environment.

If the US House also approves the larger tax relief measure and its ethanol rescue provisions, the subsidy likely will come under renewed scrutiny in the new 112th Congress that is to convene in January.

However, there is considerable opposition in the House to some of the tax relief elements of the Senate-passed bill, and there is a chance that the House will reject the overall measure and send it back to the Senate.

($1 = €0.75)

To discuss issues facing the chemical industry go to ICIS connect
Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
+1 713 525 2653

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly