Feinstein pushes amendment to trim ethanol tax breaks

Sen. Dianne Feinstein (D-Calif.) is seeking support for an amendment to the Senate tax package that would reduce federal tax credits and import protections for ethanol, according to a Capitol Hill source.

Her plan would reduce the ethanol blender’s credit to 36 cents per gallon.

The current bill — which faces a test vote Monday afternoon — would extend the credit through 2011 at the current level of 45 cents for each gallon of ethanol blended into gasoline.

Feinstein’s plan also seeks to cut the import tariff from 54 cents per gallon to 36 cents. The Senate package extends the tariff at the current rate through 2011 as well.

Feinstein and Sen. Jon Kyl (R-Ariz.) in late November led a bipartisan group of 17 senators calling for an end to ethanol subsidies.

“Subsidizing blending ethanol into gasoline is fiscally indefensible. If the current subsidy is extended for five years, the Federal Treasury would pay oil companies at least $31 billion to use 69 billion gallons of corn ethanol that the Federal Renewable Fuels Standard already requires them to use. We cannot afford to pay industry for following the law,” they wrote in a Nov. 30 letter to Senate leaders.

But Corn Belt senators and other ethanol advocates — who call the tax credits vital to farm-state economies — successfully won an extension of the credits in the larger package to extend Bush-era tax cuts and unemployment benefits.

It remains unclear to what extent — if any — senators will have a chance to vote this week on amendments to the tax package.