Today, Taxpayers for Common Sense Action sent a letter to Congress urging members to oppose ANY extension to the Volumetric Ethanol Excise Tax Credit (VEETC), and let it expire on December 31, 2010. If extended for one year, VEETC will cost taxpayers $6.1 billion!
December 10, 2010
Let Wasteful Ethanol Tax Credit Expire
Dear Congress:
The Volumetric Ethanol Excise Tax Credit (VEETC) is a $0.45 tax credit given for every gallon of corn ethanol and gasoline blended together, and it is set to expire at the end of the year. If renewed for a year, it would cost taxpayers $6 billion, accomplishing nothing more than lining industry’s pockets and snatching defeat from the jaws of taxpayer victory. We urge you to oppose the extension of VEETC at any level.
Despite the high price tag, VEETC will do nothing to create green jobs or reduce oil dependence. Even if VEETC was significantly reduced, it is still extraordinarily expensive. If the credit were to be reauthorized at a lower value, such as $0.36, the credit would still cost taxpayers $5.7 billion next year. Lowering it to $0.25 would cost $3.9 billion.
The Renewable Fuels Standard mandate – not VEETC – drives ethanol consumption. The Congressional Budget Office (CBO) reported in July that:
The scheduled rise in mandated volumes would require the production of biofuels in amounts that are probably beyond what the market would produce even if the effects of the tax credits were included. To the extent that the mandates determine levels of production in the future, the biofuels tax credit would no longer be increasing production.
The Government Accountability Office agrees, concluding in a study released last summer:
The VEETC does not affect the level of ethanol consumption and is a duplicative policy tool for increasing ethanol consumption… removing the VEETC would not adversely affect the demand for corn for ethanol and the income of corn producers, which depend on the total level of ethanol consumption.
VEETC’s effect on oil consumption is questionable and costly. CBO says it costs taxpayers between $1.78 and $4.00 for each gallon of gasoline that conventional ethanol displaces. More than $0.75 of every dollar we spend to support all forms of renewable energy go to the corn ethanol industry.
VEETC is opposed by members of both parties. Last month, a bipartisan group of 17 Senators led by Senators Diane Feinstein (D-CA) and Jon Kyl (R-AZ) called for an end to this wasteful subsidy. Taxpayers for Common Sense also sent a letter to Congress last month to end VEETC along with a coalition of 58 groups, including religious, budget, environmental, food, and foreign policy groups.
It’s time to end VEETC. We urge you to oppose an extension of VEETC at any level: it is a waste of our tax dollars.
Sincerely,
Ryan Alexander, President
Taxpayers for Common Sense
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