April 25, 2014

Bill would extend state tax break for ethanol-blended fuels

Ross Paustian

A bill awaiting the governor’s approval would temporarily maintain the tax advantage for ethanol-blended fuel. Representative Ross Paustian, a Republican from Walcott, was the bill’s floor manager in the House.

“What this bill will do, upon passage, is extend the ethanol tax credit on ethanol-blended fuel for one more year from July 1 to June 30, 2013,” Paustian said.

If state law isn’t changed, on July 1 the per gallon state tax on ethanol-blended fuels would go from 19 cents to 21 cents — the same rate charged on fuels that do not contain ethanol. The House approved the bill Wednesday. Paustian described it as a temporary fix.

“That’s because there’s been discussion of a fuel tax increase and this will allow us another year to continue the discussion and we want to be able to keep this ethanol tax credit in place during that time.” Paustian said.

Senators approved the proposal this morning. Senator Rob Hogg, a Democrat from Cedar Rapids, urged senators to continue the ethanol tax break.

“We are strong supporters of renewable fuels in this state and this is a simple, one-year extension of that,” Hogg said, “something that we need to do this year or else we have problems on July 1 with that favorable tax treatment for ethanol going away.”

The move will save Iowans who buy ethanol-blended fuel an estimated $8 million at the pump during a 12-month period.