First, the amount of the tariff is higher than the amount of the VEETC.
Therefore, one justification that has been cited for the tariff is to offset the VEETC.
U.S. taxpayers directly support ethanol usage through the Volumetric Ethanol Excise Tax Credit (VEETC).
Second, even if the offset argument is valid with the VEETC in place, the tariff still represents a substantial barrier to trade.
However, there are two points to consider regarding the VEETC offset argument.
Second, ethanol interests have argued many times that the VEETC is really an oil industry subsidy since the gasoline blender receives the money.
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Why then is the ethanol lobby so concerned about seeing the VEETC extended, especially given that the money is collected by oil companies?
One is the 45 cent per gallon subsidy (called the VEETC) that is paid to oil companies to blend ethanol into gasoline.
Of course I still maintain that with the ethanol mandate, the VEETC is redundant because it merely pays oil companies to obey the law.
This is something that U.S. ethanol producers do not want, so they lobby to keep the VEETC, which then gives a reason to argue to keep the tariff.
Interesting admission from them that the VEETC is a subsidy.
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