Senate votes to repeal ethanol tax credits

WASHINGTON (AP) — The Senate voted Thursday to repeal tax credits for producing ethanol, a vote that budget cutters hope will demonstrate a growing appetite in Congress to end special interest tax breaks to help reduce government borrowing.

The Senate voted 73-27 to repeal the $5 billion annual subsidy, just two days after rejecting an identical measure. The tax credit provides 45 cents a gallon to oil refiners who mix gasoline with ethanol, a renewable, liquid fuel additive that comes mainly from corn in the U.S.

The measure will now be added to a bill renewing a federal economic development program. The prospects for the overall bill are uncertain, but Thursday’s vote clearly endangers the ethanol tax credit, which would expire at the end of the year anyway, unless Congress renews it.

The measure passed Thursday would end the tax credit immediately. It would also repeal a 54-cent-a-gallon tariff on imported ethanol, which restricts imports, mainly from Brazil.

“The best way for ethanol to survive is to stand on its own two feet, without spending something we don’t have to get something we’re going to have anyway,” said Sen. Tom Coburn, R-Okla.

In a sign that some ethanol subsidies are likely to endure, the Senate also voted 59-41 to reject a measure that would have eliminated a government program that supports the distribution of ethanol. The House had passed a similar measure earlier in the day, by a vote of 283-128, adding it to an agriculture spending bill.

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