Setting the Net

Ethanol Producer Magazine
By Kris Bevill June 10, 2011

The concept of replacing VEETC with a variable tax credit is gaining popularity. Will it work?

Recently it’s been difficult to navigate a 24-hour news cycle without hearing at least some mention of the U.S. deficit. Discussions of the nation’s debt have dominated the political scene at the national and state levels as governments struggle with the task of regaining positive growth after a difficult economic recession. The situation has made the ethanol industry an easy target for those seeking ways to reduce government spending. The Volumetric Ethanol Excise Tax Credit and ethanol import tariff have been on some legislators’ chopping blocks for several years, and their repeated attempts to entirely eliminate the programs have been consistently defeated, but after December’s last-minute, one-year extension of both provisions, it was made clear that even pro-ethanol legislators would no longer support the continuation of VEETC or the import tariff at their current levels beyond 2011. Ethanol industry groups consented and agreed to combine their efforts and work with lawmakers to form a long-term reform plan for VEETC. By late May, the ethanol industry’s official long-term road map had yet to be unveiled, but recently introduced legislation offers a feel for what the industry’s preferred modifications look like.

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