WASHINGTON — U.S. Senator Ben Cardin (D-MD) has joined U.S. Senators Dianne Feinstein (D-Calif.) and. Tom Coburn, M.D. (R-Okla.) in introducing the Ethanol Subsidy and Tariff Repeal Act, S. 871, which will fully eliminate the Volumetric Ethanol Excise Tax Credit (VEETC) and fully repeal the tariff on imported ethanol.
“The ethanol industry does not need nor does it deserve subsidies and tariffs that are costly to American taxpayers, harm our environment and increasing the cost of gas,” said Senator Cardin. “Given our current economic crisis, we cannot continue $6 billion a year in benefits for an industry that is already making huge profits.”
The VEETC is a de facto cash subsidy that directs 45 cents to refiners for every gallon of ethanol they blend with gasoline. The VEETC costs taxpayers approximately $6 billion a year. The bill calls for repealing the VEETC subsidy by July 1, 2011 which would save approximately $3 billion this year.
The ethanol tariff is comprised of a 54-cent-per-gallon secondary tariff and a 2.5 percent ad valorem tax. The ethanol tariff makes our nation more dependent on foreign oil by increasing the price of imported ethanol.
The Center for Agricultural and Rural Development at Iowa State University recently estimated that a one-year extension of the ethanol subsidy and tariff would lead to only 427 additional direct domestic jobs at a cost of almost $6 billion, or roughly $14 million of taxpayer money per job.
Other co-sponsors include Senators Richard Burr (R-N.C.), Jim Webb (D-Va.), Susan Collins (R-Maine) and James Risch (R-Idaho).