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Alternative fuel

April 30, 2002

Bipartisan leaders of the Senate Finance, Environment and Public Works, and Agriculture Committees joined the Senate Democratic

Bipartisan leaders of the Senate Finance, Environment and Public Works, and Agriculture Committees joined the Senate Democratic Leadership in calling for an end to the Highway Trust Fund (HTF) revenue loss caused by the federal tax treatment of gasohol.

Bipartisan leaders of the Senate Finance, Environment and Public Works, and Agriculture Committees joined the Senate Democratic

According to the U.S. General Accounting Office (GAO), the 5.3-cents-per-gallon gasohol tax incentive and the 2.5-cents-per-gallon gasohol excise currently directed to the federal General Fund have cost the HTF $6 billion in foregone revenues since 1998. GAO projects this loss will grow to $20 billion over the next 10 years.

The energy legislation that passed the Senate late last week includes a provision initiated by the American Road and Transportation Builders Association that would redirect the revenue stream from gasohol's 2.5-cents-per-gallon General Fund contribution to the HTF's Highway Account. This provision would recapture over $400 million per year in highway user fee revenues. The bill, however, also would require states to triple their ethanol usage by 2012.