Legislation that would increase ethanol tax revenue to the Highway Trust Fund by some $2 billion annually has been introduced in the Senate by the leaders of the Senate Finance Committee.
The bill would provide that ethanol-blended fuel would be taxed at the same rate as gasoline, 18.4 cents per gallon, and all diesel and biodiesel blended fuels would be taxed at 24.4 cents per gallon. All tax receipts would be directed to the Highway Trust Fund.
In a statement upon introducing the bill on July 31, Sen. Charles Grassley (R-Iowa), chairman of the Senate Finance Committee, said, "Twenty-five years ago we created an alcohol fuels tax incentive to promote the use of ethanol. Today, I am introducing legislation that will simplify the excise-tax collection system for all transportation and renewable fuels." Grassley said that the Volumetric Ethanol Excise Tax Credit Act of 2003 would accomplish three goals:
* Improve the tax-collection system for renewable fuels;
* Increase the revenue source for the Highway Trust Fund; and
* Enhance the delivery of renewable fuels in the marketplace.
The additional $2 billion in Highway Trust Fund income generated by the tax change "would improve the ability of the federal government to address the nation's transportation infrastructure needs," Grassley said.
In addition to increasing revenue to the Highway Trust Fund, Grassley maintains that the tax amendment also will help eliminate tax fraud and abuse by streamlining the tax collection process.
The bill would create a new biodiesel fuel credit of 50 cents per gallon for fuel derived from agricultural products, or $1 per gallon for fuel made from virgin oils derived from agricultural products. However, the tax credit would not affect income to the Highway Trust Fund, but would be derived from the General Fund, Grassley said.