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Senate panel passes tax break for biodiesel fuelPIERRE, S.D. (AP)--A state Senate committee has endorsed Gov. Mike Rounds' plan to give biodiesel fuel a tax break to promote the production of the fuel from soybeans. The State Affairs Committee voted unanimously Jan. 23 to send the measure to the full Senate for further debate. SB148 would cut the 22-cent-a-gallon tax on diesel to 20 cents for diesel fuel that contains at least a 5 percent blend made from soybeans or other organic material. The 2-cent-a-gallon tax break would be the same as that given to ethanol, which is a gasoline blend generally made from corn. The tax break would not start until biodiesel facilities in South Dakota reach a capacity of 20 million gallons a year and produce at least 10 million gallons a year. It would end when production reaches about 20 percent of diesel fuel sold, state Agriculture Secretary Bill Even said. Even said the measure will help encourage development of soybean processing plants that will make biodiesel. Only one small plant exists now, he said. Money to compensate the state highway fund for lost fuel tax revenue would come from an environmental fund, with $800,000 a year being transferred to the highway fund. Consumer demand for biodiesel eventually will mean no tax subsidy is needed, Even said. The proposed tax break measure was written after discussions involving soybean farmers, the biodiesel industry, state officials and petroleum sellers. Rounds did not appear at the Jan. 23 committee hearing, but he has said a blend of low-sulfur diesel and fuel made from soybeans makes engines run cleaner. He said that helps vehicle owners and soybean farmers. Rounds said growth in the ethanol and biodiesel industries will help keep the price of corn and soybeans high. The governor said he makes no apology for driving up the price of corn and soybeans. "In South Dakota we want high prices on our commodity products," he said. 2/4/08 Date: 1/29/08
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