Iowa Lawmakers Examine Fuel Tax Differential on Biofuels

The ethanol and biodiesel preferential excise tax rates are set to expire June 30, 2020. Lawmakers are examining the value of these incentives relative to the cost to the Iowa Road Use Tax Fund (RUTF). Dawn Carlson, FUELIowa CEO, urged lawmakers during the hearing last Friday, to examine the overall objective of these incentives and consider what other incentives might expand biofuel sales further. Given the fact that 80% of retail sites lack compatible infrastructure to safely and legally store and dispense E15 or higher blends of ethanol, Carlson urged lawmakers to consider the potential impact of an aggressive infrastructure grant program to assist retailers who have not had the benefit of private grant monies from Prime the Pump. The state’s formula for ethanol is no longer an accurate reflection of actual ethanol sales. The ethanol formula uses supplier reports resulting in less excise taxes being collected. The departments of Transportation and Revenue reported the cost of the biofuel excise tax incentives on RUTF to be approximately $42 million from FY2014-2019. The departments questions whether any incentives, if continued, should apply to renewable diesel as it does to biodiesel.