The Volumetric Ethanol Excise Tax Credit (VEETC) is a federal tax credit of 45 cents per gallon of ethanol that goes not to the ethanol producers, but to the entity -- such as a petroleum refiner -- that blends the ethanol into gasoline. It is known as the "blender's credit" for that reason. The tax credit is an economic incentive to get renewable fuel to the retail marketplace, and the savings are usually passed along to consumers in the form of lower prices at the pump for ethanol-blended gasoline.
The tax credit is currently set to expire on December 31, 2010, but a bill has been introduced in the U.S. House of Representatives to extend VEETC for five years at the current 45-cent level. HR 4940, the "Renewable Fuels Reinvestment Act," was introduced on March 25, 2010 by Congressmen Earl Pomeroy (D-ND) and John Shimkus (R-IL). A companion bill was introduced in the U.S. Senate by Senators Charles Grassley (R-IA) and Kent Conrad (D-ND).
Research available here shows that in 2009, the U.S. ethanol industry supported nearly 400,000 jobs across all sectors of the economy and created a surplus beyond the cost of the tax credit of $3.4 billion for the federal treasury.
Allowing VEETC to expire would cost American jobs and substantial cuts in U.S. ethanol production. An estimated 112,000 jobs would be lost and domestic ethanol production would drop by 38 percent, a void that would likely be filled by imported oil and gasoline. Read the full study or a one-page summary at these links.
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