Paper companies gain support for tax credit
WASHINGTON — Lawmakers from paper-producing states vowed Thursday to save a tax credit that has provided an unintended multibillion-dollar windfall to paper companies.
Struggling paper companies recently discovered they could qualify for federal tax credits intended to promote the development of alternative fuels because they use a byproduct in the paper-making process as fuel to power their mills. The tax credits were never intended for paper companies, but now they could be worth more than $3 billion a year, according to a congressional estimate.
The tax credits are due to expire at the end of the year, and Sen. Max Baucus, chairman of the Senate Finance Committee, said he wants to make sure they are not renewed for paper companies. The Montana Democrat is working on legislation that could end the credits for paper companies — maybe even before the end of the year.
But Thursday, fellow members of the tax-writing Senate Finance Committee — all from paper-producing states — said they will fight to keep the credits through the end of the year and beyond.
Sen. Ron Wyden, D-Ore., said flatly that the credits will not expire without paper companies receiving some other relief.
“I won’t let that happen,” Wyden said in an interview.
Sen. Olympia Snowe, R-Maine, called the credit a “lifeline” for a struggling industry.
“We should be doing everything we can to salvage this industry,” Snowe said.
Congress expanded the tax credit for developing alternative fuels in 2007, offering firms 50 cents a gallon to blend renewable fuels like ethanol with traditional fossil fuels like diesel.
Paper mills produce a liquid substance called “black liquor” as a byproduct of the process that turns wood into pulp. The pulp is dried to make paper and black liquor is then used as fuel to power the mill.
The tax credit, however, is only available to firms that produce a blend of renewable fuels and traditional fossil fuels. Late last year some paper companies realized they could qualify for the credit by adding small amounts of diesel to the black liquor used for powering their mills.
One company, Memphis-based International Paper, has already received $71.6 million in credits for a single month.
Baucus called the tax breaks for paper companies a loophole that needs to be plugged as he opened a committee hearing Thursday on energy tax credits.
“We are working to undo that unintended consequence,” he said.
But Sen. Debbie Stabenow, D-Mich., said she isn’t sure it needs to be undone.
“Here’s an industry that generates a majority of its own power,” Stabenow said in an interview. “We don’t want to penalize them.”
Related News
Watson Wyatt and Towers Perrin enter $500M credit facility to pave way for mergerOctober 9th, 2009 Watson, Towers Perrin enter $500M credit facilityNEW YORK — Management consulting firms Watson Wyatt Worldwide Inc. and Towers Perrin, which plan to combine in 2010, said Friday they will enter into a $500 million revolving credit facility.
China faces new US trade complaint over paper as union, 3 producers file antidumping caseSeptember 24th, 2009 China faces new US trade complaint over paperBEIJING — A U.S. labor union and three paper companies have filed a new trade complaint over imports of Chinese paper, possibly fueling tensions between Washington and Beijing amid disputes over tires and other goods.
Himachal wants duty hike on Chinese apple concentrateSeptember 6th, 2009 SHIMLA - Himachal Pradesh wants higher import duty on apple juice concentrate from China, saying this was necessary to save the domestic industry. Apple concentrate is used for fruit juices, nectars and drinks.
Correction: Q&A on credit card reformsAugust 21st, 2009 Correction: Q&A on credit card reformsNEW YORK — In an Aug. 19 story about credit card reforms, The Associated Press erroneously reported that cardholders will face fewer surprises about credit limit changes under the new rules.
Paper maker Stora Enso to lay off up to 1,100 workers, close mills in FinlandAugust 19th, 2009 Paper maker Stora Enso to lay off up to 1,100HELSINKI — Stora Enso Oyj said Wednesday it will lay off up to 1,100 workers, cut production and close mills in Finland as the Nordic paper maker continues to struggle with dwindling revenue. The announcement came four weeks after the company reported a second-quarter net loss of €368 million ($523 million) and a 24-percent drop in net sales to €2.2 billion.
Unexpected windfall can hasten retirementAugust 14th, 2009 WASHINGTON - Older workers who get cash out of the blue are more likely to choose early retirement, according to new research. Jeffrey R. Brown and Scott Weisbenner from the University of Illinois (U-I) say the study shows that unexpected inheritances hasten retirement, lending new credence to a widely held economic theory that people value leisure time.
Commercial truck maker Paccar renews $2 billion credit facilityJune 26th, 2009 Paccar renews $2 billion credit facilityBELLEVUE, Wash. — Commercial truck maker Paccar Inc.
IRS fixes glitch that caused new tax credit to incorrectly boost retirees' pension paymentsMay 14th, 2009 IRS gives pension plans fix for tax credit glitchWASHINGTON — The IRS on Thursday offered pension plans a way to fix a glitch that has been causing the new Making Work Pay tax credit to incorrectly boost pension payments to retirees. Many retirees have been receiving additional money they are not entitled to, money that will have to be repaid at tax time next year, either through a smaller refund or a larger tax bill.
Paper maker IP says 1st-qtr profit jumps 93 percent, bolstered by huge alternative fuel creditApril 30th, 2009 Fuel credit boosts International Paper's 1Q 93 pctNEW YORK — International Paper Co.'s first-quarter profit nearly doubled, as a huge tax credit for alternative fuel use offset sluggish sales of printing papers, consumer packaging and timberland. Like other paper makers, IP is getting a boost from a federal program designed to encourage use of alternative fuels, including a blend of diesel and a substance known as "black liquor" that comes from producing pulp.
Paper maker IP says 1st-qtr profit jumps 93 percent, bolstered by huge alternative fuel creditApril 30th, 2009 International Paper's 1Q net income jumps 93 pctMEMPHIS, Tenn. — International Paper Co., the largest U.S.
Obama urges credit-card industry to end unfair practicesApril 24th, 2009 WASHINGTON - US President Barack Obama Thursday met leaders of the credit-card industry, urging them to end unfair practices that are raising costs on indebted consumers, while US lawmakers are considering a wider crackdown on the sector. Obama said he hoped to create a new system that 'eliminates some of the abuses' including sudden interest-rate hikes and late-payment fees, which have added to unmanageable debts for some US consumers.
Struggling paper makers get unexpected windfall from tax credit that could be short-livedApril 22nd, 2009 Paper companies get unexpected tax-credit windfallWASHINGTON — A law to make the earth a little greener is giving paper mills an unintended multibillion-dollar tax windfall with the help of a little diesel fuel. The bonanza, however, could be short-lived.
High global oil prices bring unexpected bonanza for exchequerFebruary 15th, 2009 NEW DELHI - High global oil prices, that saw a barrel of crude sell for nearly $150 per barrel at one point last year, has secured unexpected bonanza to the government in the form of royalty and profit petroleum, budget papers showed Monday. Against the budgeted receipts of Rs.6,777.04 crore (Rs.67.77 billion/$1.35 billion) for this fiscal from petroleum, revised receipts from royalty, profit petroleum and oil exploration licensing fee have been pegged at Rs.9,423.23 crore (Rs.94.23 billion/$1.88 billion).
Windfall tax not applicable to private players: finance ministryJanuary 11th, 2009 NEW DELHI - The ministry of finance Monday clarified that there was never any proposal to apply windfall tax to private oil producers in the country. Special secretary of the ministry Rita Menon said at a session in Petrotech 2009 that the windfall tax had been a proposal to 'formalise' the discounts offered by state-run oil producers as part of the subsidy-sharing mechanism.
Windfall tax not applicable to private players: petroleum ministryJanuary 11th, 2009 NEW DELHI - The ministry of petroleum and natural gas Monday clarified that there was never any proposal to apply windfall tax to private oil producers in the country. Special secretary of the ministry Rita Menon said at a session in Petrotech 2009 that the windfall tax had been a proposal to 'formalise' the discounts offered by state-run oil producers as part of the subsidy-sharing mechanism.
Loading ...