Good news: Congress kills ethanol subsidy and tariff
The Kansas City Star
This has to be one of the most under-covered stories arising out of Congress’ end-of-the-year scramble: The lawmakers allowed the tax credit for ethanol blenders to expire, along with a tariff that effectively kept out more efficiently produced foreign ethanol.
The measures died from inaction; they were scheduled to expire and Congress let them die. The handwriting was on the wall anyway. In June, the Senate voted 73-27 to terminate the subsidy and tariff.
The blenders’ subsidy extended a 45-cent subsidy per gallon of ethanol blended into gasoline. The tariff ended a 54-cent-per-gallon tax on imported ethanol, mainly from Brazil — which makes the stuff much more efficiently from sugar cane.
Will this kill the domestic industry? Not likely. Still in force is a federal mandate that requires a minimum amount of ethanol be used each year. In 2015, 15 billiion gallons must be used. The mandate rises to 36 billion gallons by 2036.
The blenders’ subsidy cost the taxpayers about $6 billion annually, and by some estimates the program, over its 30-year history, transferred some $45 billion to the ethanol industry. It’s always good news when a special-interest tax loophole comes to an end, especially one as wasteful as this one.