Coats Backs Bill to Reform Ethanol Subsidies and Reduce Deficit

WASHINGTON, DC – Senator Dan Coats (R-Ind.) today co-sponsored “The Ethanol Reform and Deficit Reduction Act,” a bill introduced by Senator John Thune (R-S.D.) that would end current ethanol subsidies, reduce the federal deficit by $1 billion and invest in fueling infrastructure.

“Ethanol continues to play an important role in Indiana and across the country,” said Coats. “Many Hoosiers and American businesses made investments based on Congress’ decision to extend the ethanol tax credits through the end of the year. This legislation would reform ethanol tax incentives without compromising an entire industry that helps lower gas prices and reduce our dependence on foreign oil.” 

“At the same time, the bill makes an important contribution to deficit reduction,” added Coats. “Our country is facing a historic fiscal crisis and we simply cannot continue to spend more money than we collect. This bipartisan bill is an example of how Washington and industries can share the responsibility of addressing our nation’s debt crisis. I urge Congress to support this sensible plan that would modify tax policies and encourage the biofuels industry to become economically viable.”

The bill would end the current Volumetric Ethanol Excise Tax Incentive (VEETC) on July 1, 2011, and allocate $1 billion to deficit reduction. The legislation also would invest $1.5 billion in a blender pump tax credit, an extension of the Small Ethanol Producer Tax Credit and incentives for cellulosic biofuel production.

Current ethanol tax credits are set to expire at the end of this year. On Tuesday, the Senate will vote to proceed to an alternative bill, offered by Sen. Tom Coburn (R-OK), that would end the ethanol tax credits immediately without any transition for ethanol producers.

# # #