Ethanol-blend tax revenues stay put—for now

News AASHTO Journal November 12, 2003
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Conferees on the long-stalled energy bill reached agreement on certain ethanol-blended-fuel provisions, but deferred a transfer

Conferees on the long-stalled energy bill reached agreement on certain ethanol-blended-fuel provisions, but deferred a transfer of ethanol-blend tax revenues to the Highway Trust Fund until passage of the highway and transit reauthorization bill.


Delaying the action on the ethanol tax transfer could cost the Highway Trust Fund roughly $500 million per quarter. If highway and transit reauthorization legislation is enacted by Feb. 29, the expiration date for the current extension, observers say the Treasury Department is unlikely to implement the revenue changes until the beginning of July, which could keep another $500 million from being made available to the Highway Trust Fund.


Finance Committee Chairman Charles Grassley (R-Iowa), who led the way for the ethanol-blended and biodiesel-fuel provisions of the energy tax incentives to be included in the energy bill, assured the highway community that the ethanol revenue transfer will occur.


Grassley said the agreement reached with House negotiators "contains the VEETC legislation's guarantee that purchasers of ethanol will pay the whole gas tax, making the highway trust fund whole. These Highway Trust Fund changes, including the 2.5-cents transfer and the elimination of the partial (5.2-cent per gal) exemption for ethanol-blended fuels, will be carried out when Congress next acts on the highway trust fund legislation.


"It's important for the highway community to know that the changes will be made at the earliest possible time on the legislative calendar. Since the current trust fund expenditure authority expires on Feb. 29, 2004, both the House and the Senate must act before then."


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