TESTIMONY LB 881
January 30, 2008
The Nebraska Corn Growers Association does not support LB 881. Our association has a long standing policy which opposes a direct tax on ethanol and its co-products.
Nebraska’s ethanol plants, their employees, ancillary service providers, and investors are subject to Nebraska property, income, sales, use, fuel, and a variety of other taxes. This industry contributes significantly to Nebraska’s economy and general fund revenue.
Rationalizing this new excise tax on the fact that a large portion of Nebraska produced ethanol is exported and therefore someone else will pay the tax is flawed. Most of Nebraska’s ethanol production is marketed through marketing groups who pool the output of several plants from across the Midwest. The ultimate price received by a Nebraska plant is the pooled price and that price is not affected by a plant’s individual cost of operation. Ethanol producers are price takers just like corn producers. As price takers they cannot just pass the tax on to their customers. They will be forced to absorb the tax within their operation or more likely the case, reduce the price they offer for corn.
The excise tax proposed by LB 881 has been compared to severance taxes some states levy on removal of finite natural resources. In our view, there is no comparison since Nebraska ethanol plants produce energy from a renewable resource. Oil and coal resources will eventually be depleted. In our opinion, renewable energy has a long sustainable future, which will provide significant contributions to Nebraska’s economy.
As renewable energy technology evolves the energy gain and sustainability of ethanol and other renewable fuels will provide long term positive impact to Nebraska’s financial well being.
Nebraska, to our knowledge, does not currently impose any type of general purpose excise tax on processed agricultural products. We define ethanol as a processed agricultural product. Nebraska Corn Growers Association members do not believe any new general purpose excise tax on agricultural commodities or processed products is acceptable.
The Nebraska Corn Growers Association members ask that the Revenue Committee not advance LB 881 out of committee to general file.
