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Senate panel votes to keep state tax break for ethanol-blended fuels

(Courtesy Iowa Radio News) – The Iowa Senate Ways and Means Committee this morning passed legislation that preserves the current price advantage for ethanol-blended gasoline.

The state tax on a gallon of ethanol-blended gasoline is 19 cents today. Other gasoline is taxed at 21 cents a gallon. Senator Rob Hogg, a Democrat from Cedar Rapids, says there’s broad, bipartisan support to keep this the tax break for consumers who buy ethanol.

“The idea originally was that’s an incentive to encourage people to use ethanol and so that is an incentive we’re going to preserve for another year,” Hogg says.

It saves those who buy ethanol-blended fuels at Iowa gas stations an estimated $8 million annually. Hogg says the bill also ensures Iowa retailers have the “freedom” to sell whatever blend of ethanol they want.

“There was some belief that you could have national oil companies dictating that: ‘Dealer, you can’t sell E15, or if you can sell it, it has to be at a separate pump out behind the building and you can’t take credit card payments,’” Hogg says. “So it’s not just about E15. It affects blender pumps. It affects E85. It affects everything.”

This ethanol-related legislation has passed the Republican-led Iowa House in slightly different form. Democrats in the senate are balking at a proposal included in the House bill that would permit as much as 5000 gallons of fuel to be stored in an above-ground tank Supporters say farmers want the change, as current law limits the size of above ground fuel storage tanks to 1100 gallons. Hogg says the proposal raises a few concerns for him.

“Number one is you get bigger spills and, number two, you could have bigger explosions,” Hogg says. “You know I did that official form of legislative research. I “Googled” 5000 gallon tanks and found a big explosion in Pennsylvania.”

Hogg says that prompted him to “go slow,” review the proposal with the fire marshal and push the decision off ’til next year.