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April 2, 2003
HISTORIC HIGHWAY AND ETHANOL COALITION UNITES TO SUPPORT IMPROVEMENTS TO ETHANOL EXCISE TAX CREDIT
Proposal Protects Highway Trust Fund and Energy Security
WASHINGTON, DC -The Renewable Fuels Association (RFA), along with a historic coalition of highway and agriculture groups, today sent a letter to Senate Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Max Baucus (D-MT) praising their proposal - to be introduced with Sens. Tom Daschle (D-SD) and Jim Jeffords (I-VT) - to reshape the ethanol excise tax exemption so that ethanol-blended fuels make the same contribution to the highway trust fund (HTF) as regular gasoline while at the same time retaining an important incentive to promote the use of domestic, renewable fuels. The proposal is expected to be acted upon during the Finance Committee mark up of energy tax legislation on April 2, 2003.
“After years of debating how to increase federal highway funding while preserving Congress’ commitment to renewable fuels like ethanol, today’s announcement reflects the triumph of comity over conflict,” stated Bob Dinneen, RFA president. “The ethanol industry has continuously stated that a sound energy policy and a sound highway policy need not be mutually exclusive. The Grassley/Baucus/Daschle/Jeffords proposal brings together a coalition of previously competing interests in support of a common sense approach to tax policy and energy goals. This proposal strengthens the HTF, provides tremendous new flexibility to refiners, and continues an important program that reduces our dependence on foreign oil. We strongly urge the Senate to adopt this proposal and, quite frankly, expect overwhelming support for this common sense solution.”
Currently, ethanol-blended fuel is taxed lower than regular gasoline (13.2 cents instead of 18.4 cents on a 10% ethanol blend). The proposal would replace the current ethanol excise tax exemption with a new volumetric ethanol excise tax credit (VEETC). Under the new program the entire 18.4 cents of excise tax collected goes to the highway trust fund while the 5.2 cent VEETC is credited to general revenues.
In addition, the Grassley/Baucus/Daschle/Jeffords plan returns 2.5 cents of the tax paid on ethanol blends that is currently retained in the general fund to the HTF. Together, these two changes will put an estimated additional $2 billion in the HTF annually.
In the letter to Sens. Grassley and Baucus, the coalition wrote: “The result of your proposal would allow all excise taxes collected to be deposited in the Highway Trust Fund and all credits accrued for the purchase of renewable fuels to be based on actual gallons purchased that displace fossil fuel. As such, two important national priorities would be achieved: ensuring all users of the nation’s highway network contribute equally to its improvement; and decreasing U.S. dependence on imported fuel.”
The letter was signed by Renewable Fuels Association, American Road & Transportation Builders Association, National Corn Growers Association, U.S. Chamber of Commerce, National Farmers Union, Associated General Contractors of America, American Soybean Association, American Association of State Highway & Transportation Officials, American Farm Bureau Federation, Laborers’ International Union of North America, Clean Fuels Development Coalition, International Union of Operating Engineers, Soybean Producers of America, National Stone, Sand & Gravel Association, American Corn Growers Association, American Public Transportation Association, New Uses Council, National Association of Counties, National Asphalt Pavement Association, National Ready Mixed Concrete Association, American Highway Users Alliance, National League of Cities, Association of Equipment Manufacturers, American Traffic Safety Services Association, American Society of Civil Engineers, American Council of Engineering Companies, American Concrete Pavement Association, National Utility Contractors Association, Associated Equipment Distributors, Transportation Construction Coalition, and Americans for Transportation Mobility Coalition.
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