Lift Import Tax On Ethanol, Schumer Says

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The New York Sun

Those who thought Senator Schumer had presidential ambitions may have to think again.

Mr. Schumer yesterday called for the 54-cent tax on ethanol imports to be lifted, placing him squarely at odds with the Iowa political caucus that presidential candidates have been wooing for generations.

Mr. Schumer’s push to temporarily eliminate the tax on the corn-based fuel additive is in line with President Bush’s position and also has support from some other Republicans.

The president announced his new position late last week, giving the chances of the tax being scrapped a shot in the arm at a time when all politicians have been grappling with gas prices topping $3 a gallon.

“Dropping a tariff will enable the foreign export of ethanol into our markets, which will particularly help on our coasts,” Mr. Bush said during a television interview.

Mr. Schumer, a Democrat, said the proposal, which he called a “quick and easy,” bipartisan strategy, would drive down the cost of a gallon of gas by eight cents.

“The bottom line is eight cents isn’t enough, but you’ve got to start somewhere,” the senator told reporters at a Hess gas station on Manhattan’s West Side.

“It makes no sense, when we are desperately short of ethanol, when gasoline has to have ethanol, to impose this tariff, which was done at the behest of agribusiness and the Midwestern corn farmers,” he said.

The proposal has already met strong opposition from Senator Grassley, a Republican of Iowa, who told the Des Moines Register that no such tax lift would pass Congress.

Mr. Grassley, who heads the Senate Finance Committee, which would have to review the proposal, said it was not needed because domestic ethanol supplies are adequate.

The Renewable Fuels Association, a trade association for the American ethanol industry, is also opposed to lifting the tax. Association officials have said the tax, which went into effect in 1980, is not a barrier to importing fuel.

An elimination of the tax would make it cheaper to bring in ethanol from Brazil, Mexico, and other ethanol-producing nations. In America, Iowa is the leading ethanol producer, with 22 plants and the capacity to produce millions of gallons of ethanol.

In 2004, the federal government began mandating that all gasoline contain 10% ethanol.

Mr. Schumer, who is against the ethanol mandate, is also proposing a tax break for ethanol producers in parts of America that currently have little ethanol production. The break would apply to new ethanol facilities in states, like New York, which produce less than 2% of the ethanol supply but consume higher amounts of gas.

He said shortages of ethanol in America and the high cost of transporting the additive from the Midwest make the incentive essential to creating more ethanol at home. There are currently no pipelines that carry ethanol across the country.

Representatives for Senators Clinton and McCain did not return calls yesterday and two other possible 2008 presidential candidates, Governor Pataki and Mayor Giuliani, could not be reached. But backing a tax freeze on ethanol imports is undoubtedly a tricky maneuver for anyone trying to win support in corn-rich states like Iowa.

“It’s definitely confirmation that Chuck Schumer is not running for president,” a political science professor at the University of Virginia, Larry Sabato, joked. “No presidential candidate in their right mind would sign onto a proposal to lift the tax on ethanol.”

“All of the people who run for president like ethanol because of Iowa,” Mr. Schumer said.

Mr. Sabato predicted that those interested in the White House will dodge the question now, but won’t block any proposals. He said this makes it easier for candidates to justify hanging back on the issue if they know it has key support elsewhere.


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