The House Ways and Means Committee approved a broad tax bill June 20 that includes an extension of the biodiesel tax credit and incentives for biofuel infrastructure and wind power, but the legislation will face objections in the Republican-controlled Senate.
The committee approved the Taxpayer Certainty and Disaster Relief Act of 2019, on a party-line, 25-17 vote.
“Provisions in this bill enjoy strong bipartisan support,” Rep. Mike Thompson (D-Calif) said before the vote. “It is my longstanding priority working families, working family farms, and small businesses do not suffer under our country’s wealth-transfer system.”
The bill would extend the $1-a-gallon biodiesel tax credit, blender pump infrastructure credit, and a wind production credit along with several other credits through 2020.
Some Republicans criticized the bill, saying it only provided a temporary fix for tax credits rather than a permanent solution.
“This bill continues the problematic status quo of continuing temporary extensions for a wide spectrum of tax credits,” said Adrian Smith (R-Neb).
Smith said he would like to see a more long-term solution to provide certainty for taxpayers beyond just a few years.
Some Republicans also complained that the bill would offset the cost of its tax benefits by reducing estate tax exemptions starting in 2023, three years earlier than scheduled under the 2017 tax bill. Democrats easily defeated an amendment by Rep. Jason Smith (R-Mo) that would have stripped the estate tax provision from the legislation.
After months of storming Capitol Hill, biodiesel backers are glad to see this bill address years ahead rather than only ones prior.
“The proposed multiyear, forward-looking renewal of the tax incentive will provide our industry certainty,” Kurt Kovarik, vice president of federal affairs, at the National Biodiesel Board, said.
The biodiesel tax credit, which expired at the beginning of 2018, has been applied each year from 2010–2016, but it has only taken effect at the start of the calendar year in 2011, 2013 and 2016. The credit has been applied retroactively in other years.
The tax bill also extends an expired credit for the installation of alternative fuel vehicle refueling pumps. This includes dispensing alternative fuels such as ethanol, biodiesel, natural gas, hydrogen, and electricity.
Another tax credit would allow an additional first-year 50-percent bonus depreciation for cellulosic biofuel facilities and a wind production credit expiring this year would be extended for one year.
The House action on the tax extenders is promising for biodiesel producers, but the provision reducing estate tax exemptions in 2023 would be a non-starter for Senate Republicans.
“There’s a possibility we’ll be able to deal with (the bill) in the Senate and make compromises with the House,” Sen. Chuck Grassley (R-Iowa) said.
Under the Constitution, tax bills must originate in the House, so Grassley said he welcomed the House action even if the bill can’t pass the Senate in its current form.