Wednesday, July 08, 2020
Hawai'i Free Press

Current Articles | Archives

Sunday, July 17, 2011
Query Results of Targeted Tax Credits
By Lowell L Kalapa @ 7:57 PM :: 4241 Views :: Energy, Environment

by Lowell L. Kalapa, Tax Foundation of Hawaii

Did you enjoy that slice of bacon with your scrambled eggs and toast this morning along with that cup of coffee?

Hopefully you “enjoyed” it without knowing how much it cost to put that slice of bacon on your plate. For those who do the shopping for their households, they know that slice has gotten increasingly expensive in the past few years rising from $3 a pound to more than $7 a pound in recent weeks when it is not on sale. And even if it is on sale, it probably is about $3, but only for 12 ounces. Consumers have seen other meat and poultry products that depend on corn feedstock rise dramatically in recent years.

Bacon is merely a reflection of good political intentions gone bad as elected officials rushed to embrace eco-friendly strategies. In this case, the mantra focused on reducing dependence on fossil fuels by blending ethanol with gasoline to produce what was know as “gasohol” for use in the nation’s automobiles. The search for gasoline alternatives had its impetus in the 1974 oil crisis and ever since then, the pursuit has taken on a fevered pitch to the point where Congress enacted a tax credit to encourage fuel production from ethanol.

At the time of the adoption of the credit, corn was the most likely candidate to be used as the base for producing ethanol followed by sugar, but because the production of corn created a plentiful supply at the time federal lawmakers were encouraged to provide a tax credit of 45 cents for each gallon of ethanol that was blended with gasoline. In the ensuing years, though, the public has learned that ethanol is not the most fuel efficient source of alternate energy and that, in fact, it takes more energy to grow the corn that is used to make ethanol than the energy that the burning of ethanol produces.

Here in Hawaii, eco-conscientious lawmakers jumped on the bandwagon early on and exempted the sales of ethanol blended fuels from the state’s 4% general excise tax as a way to encourage the use of “gasohol.” While that provision kept on getting renewed over a period of 15 years, no one took advantage of it largely because the cost of that blended fuel was still more expensive than plain, old gasoline.

It was not until the former governor signed a mandate that all fuel henceforth was to be blended with at least 10% alcohol did the use of “gasohol” become widespread. That mandate came perhaps in an effort to encourage investors to build an ethanol plant that would use sugarcane as the source for the alcohol production. Lawmakers had also embraced the idea of alcohol-blended fuels a few years earlier by establishing a tax credit to encourage the growing of sugar cane as the feedstock for an ethanol producing plant. But as a result of bureaucratic red tape, the plant never got built, providing an opportunity to reevaluate the use of ethanol.

And perhaps it was a good thing that such an ethanol producing plant never came into fruition during all of these years that the tax credit was available, for in the meantime, as research has shown, making ethanol from corn or sugar cane is not that energy efficient, taking more energy to make the stuff than it produces. As a result, lawmakers in the past couple of sessions have tried to reshape the tax credit for ethanol producing facilities into a tax credit for “biofuel” production as the jury is still out as to what is the most efficient and productive plant source from which to produce alternate energy.

The bottom line is that using public resources, such as tax incentives and tax credits, to supposedly influence human behavior and encourage certain types of activity is inefficient and wasteful. Adopting the federal tax credit for ethanol not only provided a windfall for corn farmers, but it created an artificial demand for corn feedstock and instead of shifting consumption to a more energy-efficient alternative, the tax incentive drove up the cost of corn feedstock as the tax credit created artificial demand which, in turn, increased the price of corn that is used to feed livestock. The result of the latter is the higher costs at the supermarket for meat and poultry products.

Here in Hawaii the tax incentives and the executive order to blend all fuel merely increased the cost for the highway user and shifted the export of consumer dollars from the oil fields of the Middle East and Indonesia to the sugar fields of Brazil. And because of the lost tax revenues, taxpayers had to forego tax relief.

By the way, hope the bacon was crisp!

--- 30 ---

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

808 State Update AM940

ABCDEFG Blog

ACA Signups Hawaii

ACCE

ALEC

Alliance Defending Freedom

Aloha Life Advocates

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

American Mothers of Hawaii

AMVETS-Hawaii

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Audit The Rail

Ballotpedia Hawaii

Better Hawaii 

Blaisdell Memorial Project

Broken Trust 

Build More Hawaiian Homes Working Group

CAFR Hawaii

Castaway Conservative

Children's Alliance Hawaii

Children's Rights Institute

ChinaTownWatch.com

Christian Homeschoolers of Hawaii

Citizens for Recall

Cliff Slater's Second Opinion

Coffee Break

CSIS Pacific Forum

DAR Hawaii

DeedySupport.com

DVids Hawaii

E Hana Kakou Kelii Akina

E Māua Ola i Moku o Keawe

Farmers For Choice Hawaii

FIRE

Fix Oahu!

Follow the Money Hawaii

Frank in Hawaii

Front Page Magazine

Frontline: The Fixers

Genetic Literacy Project

Get Off Your Butts!

God, Freedom, America

Grassroot Institute

Habele.org

Hawaii Aganst Assisted Suicide

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crime Victims' Rights

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defending Marriage

Hawaii Defense Foundation

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Firearm Community

Hawaii Fishermen's Alliance

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii March for Life

Hawaii Meth Project

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Right to Life -- Big Island

Hawaii Right to Life -- Oahu

Hawaii Shield Law Coalition

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

Heritage Foundation

HI Coalition Against Legalized Gambling

HIEC.Coop 

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Homeless Crisis

Honolulu Navy League

Honolulu Traffic

Horns of Jericho Blog

House Minority Blog

House Republican Caucus YouTube

HPACC

Hump Day Report

I Vote Hawaii

If Hawaii News

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

Iowa Meets Maui

Jackson v Abercrombie

Jihad Watch

July 4 in Hawaii

Kahle v New Hope

Kakaako Cares

Kau TEA Party

Kauai Co GOP

Keep Hawaii's Heroes

KeyWiki

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

MentalIllnessPolicy.org

Middle East Forum--The Legal Project

Mililani Conservatives for Change

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

Muslim Brotherhood in America

NAMI Hawaii

NARTH

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

National Wind Watch

New Hawaiian

New Zeal

NFIB Hawaii News

No GMO Means No Aloha

Northwest Economic Policy Seminar

Not Dead Yet, Hawaii

Now What I Really Think

NRA-ILA Hawaii

Oahu Alternative Transport

ObamaCare Abortion Hawaii

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Pacific Aviation Museum

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons 

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

Republican Party -- Hawaii State

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

SenatorFong.com

SIFE Remington

SIFE W. Oahu 

Sink the Jones Act

Smart About Marijuana--Hawaii

St Marianne Cope

State Budget Solutions Hawaii

State Policy Network

Statehood for Guam

Tax Foundation of Hawaii

The Harriet Tubman Agenda

The Long War Journal

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

Truth About Trade & Technology - Hawaii

UCC Truths

Union Members Know Your Rights

US Tax Foundation Hawaii Info

Valor in the Pacific

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT