Free Market Coalition Urges Congress to Let Ethanol Tax Breaks and Trade Protection Expire

by Marlo LewisOctober 21, 2010 @ 1:50 pm

Yesterday on this site I explained why a “Do Nothing Congress on Ethanol Would Do a Lot of Good.” I also mentioned that today, a coalition of free market groups would be publishing an open letter advising Congress to let the clock run out on tax favoritism and trade protection for corn ethanol.

The groups issuing the joint letter are the Competitive Enterprise Institute (CEI), Freedom Action, the American Conservative Union, Freedom Works, National Center for Public Policy Research, and National Taxpayers Union.

CEI’s press release appears below. It includes commentary by yours truly on Obama Agriculture Secretary Tom Vilsack’s announcement of new biofuel initiatives at a press conference this morning, a link to the coalition letter, and a link to video excerpts of a speech in 2006 by then Gov. Tom Vilsack. The video illustrates the famous French adage, plus ca change, plus c’est la meme chose (loosely translated, ”The more things change, the more special-interest politics stays the same”).

CEI’s press release follows:

Contact:
Nicole Ciandella, 202.331.2773

Tax-Subsidized Ethanol Boondoggle Set to Expire
Coalition Urges Congress to End Tax Breaks Tariff Protection for Ethanol

Special tax credits and tariff protection for ethanol are set to expire at the year’s end. To counter the corn ethanol lobby, which urges Congress to reauthorize these special-interest giveaways plus enact new mandates and subsidies, a coalition of free-market groups advises Congress to “do nothing” and let the clock run out on the tax credit and tariff.

The domestic ethanol industry currently enjoys a 45¢ per gallon “Volumetric Ethanol Tax Credit” (VEETC), which costs taxpayers $5-6 billion annually, and a 54¢ per gallon protective tariff, which prevents lower-cost Brazilian ethanol from competing in U.S. markets.

“Congress has a rare opportunity to avoid $25-30 billion in new deficit spending, ease consumers’ pain at the pump, and scale back political manipulation of energy markets by literally doing nothing,” the coalition told Congress in a letter today.

The coalition released its letter today because Agriculture Secretary Tom Vilsack held a press conference this morning announcing new Obama Administration biofuel initiatives.

Vilsack said the VEETC should be extended on a “short-term, fiscally responsible” basis, but would not define what that means. Similarly, he said the tariff should “eventually” expire, but would not propose a timetable for phasing it out.

“In 2006, when Secy. Vilsack was Governor of Iowa, he said the exact same things – that the tariff and tax credit eventually had to end,” said Marlo Lewis, Senior Fellow at the Competitive Enterprise Institute. “Gov. Vilsack didn’t say then when the phase out should start – and Secy. Vilsack is still not saying.” A video excerpt of Gov. Vilsack’s 2006 remarks on ethanol is available on Youtube.

“For fiscal, humanitarian, and environmental reasons, the ethanol tariff and tax credit must go,” said Lewis.

Read the full coalition letter here.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s