Transportation construction and ethanol communities bridge tax rivalry

Two former fuel-tax rivals have formed a legislative partnership to ensure continued federal financial support for highway and bridge improvements.

During the 10th annual National Ethanol Conference, the Renewable Fuels Association honored the American Road and Transportation Builders Association with its “Industry Partner Award” for helping reform federal tax policy on ethanol-blended motor fuels.

“It [the award] recognized that we’ve been a partner in this,” said Matt Jeanneret, vice president of communications for ARTBA. “It’s bringing together two communities that traditionally don’t work together.”

The award signified the combined efforts of the two organizations in lobbying for “The American Jobs Creation Act of 2004,” signed into law by President Bush in October. The law could generate more than $22 billion in additional user revenue to the Highway Trust Fund during the next six years, according to ARTBA.

The law could also help create nearly 1 million jobs in the transportation construction and related industries.

The partnership between ARTBA and RFA was formed to address issues surrounding an ethanol-blended fuel tax credit. Motorists using the fuel were taxed at a lower rate compared to those who purchased straight gasoline.

Recognizing this, ARTBA and RFA began their joint venture in 2001 to bring the ethanol and transportation communities together and help pass a law to equalize the tax policy.

“We don’t have any issues with ethanol,” Jeanerette said. “We just wanted to make sure the tax treatment was fair.”

Prior to approval of the American Jobs Creation Act, at least 5.2 cents from every gallon of ethanol-blended gas was being sent to a general fund, rather than the Highway Trust Fund. The October law redirected this amount – as much as $19 billion – for highway and bridge improvements.

Monte Shaw, spokesman for RFA, was unavailable for comment.

The ethanol tax credit is provided to gasoline marketers and oil companies as an incentive to blend their gasoline with renewable ethanol. RFA touts the credit as a cost-effective program that returns more revenue to the U.S. Treasury than it costs.

The federal ethanol program was established following the OPEC oil embargoes of the 1970s. Ethanol is considered an alternative to petroleum, and reduces tailpipe emissions with only a slight rise in a vehicle’s miles per gallon.

Ethanol has been used to subsidize the oil industry since the early 1900s, according to RFA. During the past century, U.S. oil production has plummeted while annual U.S. ethanol production has grown by more than 2 billion gallons.

ARTBA also achieved a long-standing legislative goal of providing the necessary resources to combat unlawful motor fuel tax evasion. At least $3 billion previously lost to a variety of actions, such as toll avoidance, is now being routed to transportation funding.

Jeanerette said he expects the organizations’ partnership to continue, especially since their primary goal is renewal of the TEA-21 legislation, set to expire in May. He said the ethanol-Highway-Trust-Fund fix is a good model for passage of that bill.

Patrick Beeson can be contacted at pbeeson@randallpub.com.