The National Cattlemen's Beef Association (NCBA) commends the U.S. senators who sent a letter to U.S. Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell urging them to allow the 30-year-old tax credit and protective tariff for corn-based ethanol to expire as scheduled on Dec. 31, 2010. NCBA Executive Director of Legislative Affairs Kristina Butts says the “commonsense” mentality taken by the 15 senators is laudable and she hopes more senators would follow suit to allow the subsidies to expire.
“The corn-based ethanol industry has been propped up for 30 years with 45¢/gal. blending credit and the 54¢/gal. import tariff, but the day has come for these subsidies to end,” Butts said. “NCBA supports the development of renewable and alternative fuels. However, as an industry that competes head to head with the corn-based ethanol industry for our major input, we feel it’s time to level the playing field for all commodities competing for corn. Allowing the subsidies to expire may require a tough vote for elected officials, but NCBA commends the 15 U.S. Senators for taking their stand in support of allowing these ethanol subsidies to expire.”
According to USDA, corn use for ethanol-production increased from 1.6 billion bu. during the 2005-2006 marketing year to 3.7 billion bu. during the 2008-2009 marketing year, which will account for more than 33% of total corn use.
Butts pointed to an August 2009 U.S. Government Accountability Office report titled “Biofuels – Potential Effects and Challenges of Required Increases in Production and Use” as evidence that the corn-based ethanol industry is mature and that the Volumetric Ethanol Excise Tax Credit (VEETC) should be allowed to expire. According to the report, the VEETC’s annual cost to the Treasury in forgone revenues could grow from $4 billion in 2008 to nearly $7 billion in 2015 for conventional corn starch ethanol.
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What do you think? Should the ethanol subsidy be allowed to expire?