Grain Bins


President signs tax bill extending ethanol credit

Posted on December 20, 2010

A tax bill approved by Congress and signed by President Obama will extend the 45-cent-per-gallon tax credit for ethanol and a 54-cent-per-gallon import tariff through the end of 2011.
The U.S. Senate overwhelmingly passed the measure Dec. 15 and the House followed suit Dec. 16 just before midnight, then sent the bill to President Obama.
The legislation also includes approval of the estate tax break, a two-year extension on all of the Bush-era tax cuts, and a 13-month extension of unemployment insurance benefits.
The National Corn Growers Association pushed hard for an extension of the Volumetric Ethanol Excise Tax Credit.
“We are very happy to see the one-year extension of the ethanol blender’s credit and a two-year reformed estate tax move,” NCGA President Bart Schott of North Dakota said. “These extensions were among the highest priorities for our organization in 2010; failure to renew both would have done much to harm our nation’s rural economy and the future of America’s farms.”
Gary Duffy, president of the South Dakota Corn Growers Association, said it’s a relief to the ethanol industry to know what’s ahead, to be assured the tax credits remain in place for 2010.
“The tax issues will be up on the table, so everything should be on a level playing field, getting us through at least next year,” Duffy said.
Keith Alverson, an SDCGA board member who is chairman of the NCGA ethanol committee, said it was vital to get the extension passed now. The credits would have expired at the end of December. There’s also concern that the new Congress will cut spending.
“It was a huge accomplishment to get something done this year,” he said. “It’s important for the industry to have that continuation. We’ve got another year to work on it and get a little bit more creative on which ways we want things to go, and which ways the White House and Congress might want to go as far as ethanol.”
South Dakota’s congressional delegation of Sens. Tim Johnson and John Thune and Rep. Stephanie Herseth Sandlin voted in favor of the bill.
Other extensions:

  • The small-producer ethanol tax credit at its full amount of 10 cents per gallon through the end of 2011
  • The alternative vehicle property tax credit at a 30 percent rate through the end of 2011
  • The $1-per-gallon biodiesel tax credit retroactively, from when it expired at the end of 2009 through the end of 2011

The House vote was 277-148 with 139 Democrats and 138 Republicans voting in favor of the deal. The Senate vote was 81-19. The bill escaped last-minute efforts in both the House and Senate to reduce the VEETC to 36 cents.
The legislation provides an exemption and top rate for the estate tax. Instead of reverting to the $1 million exemption and 55 percent top rate, the legislation provides for a $5 million exemption and a top rate of 35 percent. If the estate tax had not been reformed, many farmers would have been forced to sell land, machinery and buildings to pay the inheritance tax.
“The estate tax reform will allow greater flexibility when planning for the future, and farmers won’t have to worry about losing their land to pay an inheritance tax,” Schott said. “Farmers now have a better ability to pass their land onto the next generation and we can keep America’s farms in our families.”

What others are saying:
Brian Jennings, executive vice president of the American Coalition for Ethanol ¬– “This one-year extension will provide the ethanol industry the opportunity we asked for to continue identifying the best long-term roadmap for the tax credit and overall ethanol policy reforms. We look forward to working with Congress in the 112th to identify the best path forward for the economic, environmental, and energy security benefits of our homegrown fuel.”
Bob Dinneen, president and CEO of the Renewable Fuels Association – “House members have struck a blow to the oil status quo and extended important tax policies that will allow America’s ethanol industry to grow and evolve,” said Bob Dinneen, president and CEO of the Renewable Fuels Association.
Growth Energy CEO Tom Buis – “This vote, which includes an extension of ethanol tax policy, will provide certainty in the market and give us a chance to work with Congress and the administration to enact longer-term tax policy reforms that will level the playing field in the fuels market. The infrastructure build-out proposed in our Fueling Freedom proposal will help open the market to reduce our dependence on foreign oil, improve our environment, create U.S. jobs that can’t be outsourced and strengthen our national security.”

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