Two House members of the Ways and Means Committee introduced legislation Thursday to repeal a key subsidy for ethanol, signaling growing support for eliminating the blender’s tax credit or the Volumetric Ethanol Excise Tax Credit (VEETC). The bill also includes repeal of the tariff on imported ethanol. Reps. Wally Herger (R-CA) and Joseph Crowley (D-NY) both members of the Ways and Means Committee introduced H.R. 2307, showing a readiness by Republicans to renege, at least in certain cases, on their anti-tax hike pledge. Eliminating the estimated $6 billion-per-year credit would put the federal government in a position to save $3 billion between now and the credits scheduled expiration at the end of 2011.
A bipartisan group of Republicans and Democrats– including four additional Ways and Means members have cosponsored the measure. The 13 additional cosponsors are Earl Blumenauer (D-OR); Mary Bono Mack (R-CA); Jim Costa (D-CA); Jeff Flake (R-AZ); Bob Goodlatte (R-VA); Sam Johnson (R-TX); Leonard Lance (R-NJ); Rick Larsen (D-WA); Jim Matheson (D-UT); Devin Nunes- (R-CA); Pete Stark (D-CA); Peter Welch (D-VT); and Steve Womack (R-AR).
The Senate last week passed similar legislation (the Coburn-Feinstein amendment) by a 73-27 vote on the Economic Development Act (EDA), but the EDA died. The amendment would have faced an all-but-certain challenge in any case because of the constitutional requirement that revenue measures originate in the House. Passage of the Herger-Crowley legislation could circumvent all this maneuvering.
Many lawmakers view the VEETC as a burden on taxpayers. “We look at this as costing the American consumers. We look at this as being inefficient. We look at this as distorting the market,” Rep. Wally Herger (R-CA) said. Herger added that he agrees with Ways and Means Chairman Dave Camp (R-MI) in support of an overhaul of the entire tax code. The National Chicken Council, along with dozens of environmental, taxpayer, and other groups, expressed their support for the legislation in a letter to Representatives Herger and Joseph Crowley (D-NY).
“The ethanol program has driven up the cost of corn to sky-high levels and has cost chicken companies and consumers billions of dollars. We hope the House will join the Senate in voting to end the unjustified federal subsidy for blending ethanol into motor gasoline, and the protective tariff on imported ethanol as well,” said Mike Brown, president of NCC.
