Tax Credits Could Boost Iowa Biofuels
– March 5, 2016, Iowa Farmer Today
Iowa’s biofuels and biotechnology companies are watching closely as the legislature discusses a proposal to establish a renewable biochemical tax credit in the state.
The credit was first discussed last year in the legislature, but did not pass. Gov. Terry Branstad included the idea in his budget proposal in January of this year, and similar bills passed out of committees in the Iowa House and Senate before the recent legislative funnel deadline.
“We feel like it’s important economic development policy for Iowa,” says Joe Hrdlicka, executive director of the Iowa Biotechnology Association.
The two bills, Senate Study Bill 3001 and House File 2288, each call for the establishment of a fund which would provide a 5 cent per pound tax credit for high-value chemicals produced in the state. The program would be capped at $10 million per year and $1 million per company (or $500,000 per company for companies more than five years old).
The idea, Hrdlicka says, is to encourage the growth of the biotech industry in Iowa. It would also boost the biofuel industry, since many of the chemicals that could be produced are co-products or by-products of the ethanol or biodiesel production processes. The credit could help provide a profitable market for those co-products.
“The potential is pretty great (for growth in those industries),” Hrdlicka says, adding it would allow state government to build upon what he sees as Iowa’s economic strengths. “From our standpoint it is smart economic development policy.”
Support for the proposed legislation appears to be bi-partisan, he adds. But lawmakers may be looking to make the idea revenue neutral or otherwise to find a proper way to finance the idea.
The bills both moved out of the Senate Economic Growth Committee and the House Economic Growth Committee and now will be considered by the ways and means committees in each chamber.