Biodiesel tax incentive to take effect
Nov 1, 2004 12:00 PM
President George W Bush has signed into law a bill containing the first biodiesel tax incentive, a provision expected to increase domestic energy security, reduce pollution, and stimulate the economy. The ethanol tax incentive, part of HR 4520, also known as the American JOBS Creation Act of 2004, was championed by Sens Chuck Grassley (R-IA) and Blanche Lincoln (D-AR), Rep Kenny Hulshof (R-MO), and others.
The incentive, structured as a federal excise tax credit, amounts to a penny per percentage point of biodiesel blended with petroleum diesel for first-use oils such as soybean oil, and a half-penny per percentage for biodiesel made from other sources, eg, recycled cooking oil. It will lower the cost of biodiesel to consumers in taxable and tax-exempt markets.
This incentive is expected to boost biodiesel demand from an estimated 30 million gallons in fiscal year 2004 to at least 124 million gallons per year, based on a United States Department of Agriculture study.
The tax incentive will take effect Jan 1, 2005, and lasts for two years. It is expected to provide an economic surge in several sectors of the US economy including manufacturing, agriculture, and all sectors that provide support services to these industries. It's estimated that the tax incentive could create up to 50 thousand jobs in the United States over the next 10 years. The provisions could increase US gross output by almost $7 billion.
A national public opinion survey of adults showed 89% of Americans thought it was important for Congress to pass a biodiesel tax incentive to make American-made biodiesel more cost competitive with regular diesel fuel.
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