Coburn, Cardin Offer Bill to Eliminate Ethanol Tax Credit

Senators Tom Coburn (R-OK) and Ben Cardin (D-MD) have introduced legislation today that would repeal the Volumetric Ethanol Excise Tax Credit (VEETC) or “blenders tax credit,” according to a joint press release.

The release says eliminating this tax credit would “save taxpayers $6 billion.” It provides “.45 cents per gallon to blenders of ethanol.”


Last week, the Government Accountability Office (GAO) released a report describing the tax credit as “largely unneeded today to ensure demand for domestic ethanol production.”


While there are a wide range of federal incentives available for ethanol production, the VEETC essentially provides free money for blenders who are already mandated by the Renewable Fuels Standard (RFS) to blend ethanol in fuel.

Moreover, while born of good intentions, federal subsidies for ethanol have had less than satisfactory results.  Ethanol-blended fuel is nearly a third less efficient than gasoline (ethanol burns at 68 percent the energy content of gasoline), has contributed to the increased price of corn (as well as land, feed, and other input costs), and can cause engine damage in motor vehicles.

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Filed under Ethanol, Taxes

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