The Politics of Tax-and-Blend

Business News/Analysis, Federal Legislation, Opinions, Policy

June 2, 2011

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by Jim Lane (Biofuels Digest) …Instead of simply not collecting a portion of the fuel tax, the consumer is charged the whole amount, which is collected by the gas station and paid to the government. The government analyzes all this. Oil refiners then file a bunch of forms based on how much ethanol they blended into their fuel. The government analyzes all that. Auditors, lawyers, and accountants seem to do very well out of all this.
Then the government waives a portion of the tax, in the form of a tax credit. You might have missed it in your latest 1040 filing, and wondered which rich farmer ran away with your tax refund. Or which fat-cat biofuels producer got it through lobbying pals on Capitol Hill.
Except, ah, that the tax credit doesn’t go to the farmer, or the biofuels producer, or the gas station owner, or you. It goes to the oil company.
It goes with the subsidized oil pipelines, the percentage depletion allowance, the nonconventional fuel production credit, the enhanced oil recovery credit, the accelerated depreciation allowances, and the extraction, production and use tax credit. So that the trillion-gallon, global-scale oil industry can more effectively compete with the dread 30 billion gallon biofuels industry. READ MORE

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