A myriad of options have been under consideration in Washington when it comes to the ethanol production incentive that expires at the end of 2010. And Senate Finance Committee Chairman Max Baucus (D-Mont.) today unveiled a package of tax provisions which address the ethanol credit and perhaps just as important, the expiring 2001 and 2003 tax cuts.
The centerpiece of the Baucus plan is a permanent extension of the 2001 and 2003 tax cuts for individuals making under $200,000 and couples making less than $250,000. But given the position staked out by Republicans, that portion of the deal won't be the final word.
Of interest to ag and biofuels backers are provisions dealing with the blender credit and even the biodiesel tax credit which lapsed at the end of 2009.
Under the Baucus plan, there would be:
- A one-year extension of the ethanol tax credit, but the level would decline from current 45 cents per gallon to 36 cents per gallon.
- The ethanol small producer's tax credit would also be extended, but at 8 cents per gallon, down 2 cents per gallon from the current law.
- A one-year extension of the ethanol import duty at 54 cents per gallon.
- A resumption of the biodiesel tax credit for 2011 at $1 per gallon.
There are a host of other provisions in the Baucus plan. Here's a link to read the highlights of the plan.
As for the U.S. ethanol industry, Renewable Fuels Association head Bob Dinneen said, "Senator Baucus's approach is a good one, recognizing the importance of this investment and providing some market stability as good faith efforts to responsibly reform ethanol tax policy continue."
The American Coalition for Ethanol also hailed the Baucus plan despite signaling they wished it would be the current rate and not a reduced level.
But given the position staked out by Republican Senators earlier this week that they won't consider any bill until an agreement is had on spending and the tax cuts, the Baucus plan won't be the final word on what happens, especially relative to the 2001 and 2003 tax cuts. So while biofuels interests clearly want to see the tax credits continued, this is one of those times when watching big picture -- the 2001 and 2003 tax cuts -- will be a more-accurate barometer of what could happen relative to biofuels credits.