The Society of Independent Gasoline Marketers of America (SIGMA) on Nov. 14 told members of the Senate Finance Committee that although it supports the biodiesel blender’s tax credit, the association would prefer no credit rather than have it converted to a producer’s credit.
The blenders’ credit has worked successfully to build a robust biodiesel and renewable diesel industry, the trade group said in its letter, and shifting to a producer credit would limit supply and raise the price of diesel fuel.
"SIGMA urges the Finance Committee to extend and responsibly phase out the biodiesel blenders' tax credit as it considers tax reform legislation. In addition, SIGMA calls on the committee to oppose any efforts to restructure the credit as a producers' credit," the group wrote. “Such a change would be so damaging as to make no credit at all a better option than a producers’ credit.”
The Senate Finance Committee began marking up a tax code reform bill on Nov. 13. Among the more than 300 amendments filed was an amendment introduced by Senator Chuck Grassley (R-Iowa) aimed at extending and modifying the biodiesel tax credit. Specifically, Sen. Grassley is seeking to extend the $1 per gallon biodiesel tax credit but transfer it upstream to a producers’ credit, a move strongly opposed by NATSO and other members of the fuel retailing community.
NATSO and a diverse group of biodiesel producers, fuel retailers and trucking interests representing every segment of the biodiesel supply chain sent a letter the Senate Finance Committee and House Ways and Means Committee on Oct. 31 in support of extending and phasing out the biodiesel blenders’ tax credit, and outlining their opposition to efforts to shift the credit to a producers’ credit as the tax-writing committees consider tax reform legislation.
From 2005 to 2016, the biodiesel blenders' tax credit successfully helped increase the domestic use of biofuels, reducing dependence on foreign oil, increasing U.S. energy independence and security, and achieving improvements in air quality. The credit ultimately lowered fuel prices for American consumers. However, the on again off again nature of the biodiesel tax credit, which expired in 2016, has created market uncertainty and left biodiesel blenders and retailers in the lurch as they wait to see if the credit will be extended.
Shifting to a producers' credit would essentially place a $1.00 per gallon tax on imported biodiesel, reducing blenders' affordable access to biodiesel and increasing the prices that blenders' must pay—which would be passed directly on to consumers.
A producers' credit also would incentivize the exporting of domestically-produced biodiesel, as producers would not be required to sell their product solely in the U.S. This would again reduce the amount of biofuel available to blend domestically and raise prices for consumers.
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