The End of Ethanol Subsidies (!/?)

January 2, 2012 by

A January 2, 2012 Washington Post editorial noted that, Congress closed 2011 without continuing two hideous ethanol subsidies.  It’s about time; now, will they stick to their guns?  Perhaps.

For years, many of us argued that the $0.45 per gallon tax credit for adding ethanol to gasoline was stupid, since federal law required oil companies to blend at least 10% ethanol into each gallon of gasoline they sold.  Oil companies agreed; a combination of a mandate and a tax incentive made no sense.

We also argued that the $0.54 per gallon tariff on imported ethanol should be abolished.  It almost was, at the end of 2010, but at the last moment Congress extended both tariff and tax credit (continuing a cost of $6 Billion per year on Americans who drive cars or who use sugar and sweeteners — all of us.)

But this year Congress let the tariff and the tax credit expire.  The mandate for ethanol content in gasoline goes on; in fact Congress raised the mandated ethanol percentages and volumes from 10 billion gallons several years ago, to 14 billion now, and 36 billion by 2022.  Shame on them.

But now we can say, “Congress finally did one thing right.”  And no one who signed the “No new taxes” pledge can call for reimposition of the blenders’ credit or the import tariff, since reimposition is different from continuation.  Reimposition would add $6Billion per year in new taxes to on Americans!

Maybe 2012 will be a better year.  Let’s hope so.  Happy New Year.

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