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US officials weigh plan to shield farmers from expansion of refinery biofuel waivers, sources say

investing.com ·

US officials weigh plan to shield farmers from expansion of refinery biofuel waivers, sources say

President Donald Trump and high-ranking U.S. officials deliberated on a proposal on Wednesday to safeguard the agricultural regions of America from a projected increase in waivers for biofuel regulations. The administration is contemplating a strategy to raise biofuel allocations for the 2027 fiscal year by approximately 500 million gallons, aiming to mitigate any potential harm caused by forthcoming waivers for smaller refineries, according to two sources close to the discussion.

The exact decision has not yet been made by the administration. This debate reignites one of the most contentious energy disagreements during Trump's initial term, where expansive refinery exemptions garnered strong opposition from Midwestern farmers and ethanol producers, while garnering favor from oil refiners. The issue has recently reemerged as the administration strives to reduce fuel costs amidst the ongoing conflict in Iran, all while being cautious not to incite a backlash from rural constituents ahead of the upcoming November mid-term elections.

The White House is championing a plan to substantially enlarge the contentious small refinery exemption program, a move that has sparked opposition from the U.S. agricultural heartland. They argued that the administration's objective is to stabilize soaring gas prices to assist Trump's fellow Republicans in retaining control of the Congress in the upcoming midterm elections.

The potential broadening of refinery waivers has left traders anticipating a decline in demand for biofuels, causing the prices for renewable fuel credits, also known as RINs, to plummet sharply. The conflict between oil refiners and farmers has persisted over whether the ultimate consumer ultimately bears the brunt of the price surge when renewable fuel credit prices rise.

A coalition of farm and biofuel organizations urged Trump on Thursday to reject any expansion of waivers, cautioning that a surge in exemptions for small refineries would harm rural America by diminishing demand for crops and renewable fuels. In a letter to Trump, the groups, which include the Renewable Fuels Association, Growth Energy, and the National Farmers Union, implored the administration to maintain exemptions for the 2025 compliance year in line with the figures the Environmental Protection Agency projected when it established the nation's biofuel blending targets for 2026 and 2027.

The administration is deliberating on roughly doubling the size of the exemptions, from 990 million credits to a potential 1.8 billion, sources have conveyed to Reuters. A resolution is anticipated before the end of August. The groups warned that granting exemptions far beyond the levels anticipated by the EPA would obliterate the demand signal generated by the agency's March rule setting the 2026 and 2027 renewable volume obligations, or RVOs.

The fallout would be severe and immediate, the groups stated, warning that excess exemptions could lead to the collapse of biofuel markets, reducing demand for corn and soybean oil. A White House official affirmed that the Trump administration will make a decision that is in the best interests of consumers, farmers, and energy supply chains. The Environmental Protection Agency (EPA) had not yet provided a comment.

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Why is a consumption tax cut supported? The distrust at the root of the "painful tax" feeling 政府・与党は、物価高対策として、消費税を10％から5％に引き下げる検討に入った。麻生太郎副首相兼財務相は「消費税を5％に下げると、経済対策として10兆円の効果がある」と発言し、与党の一部からは消費税率を3％に下げる案も出ている。 The government and the ruling party are considering reducing the consumption tax from 10% to 5% as a measure against rising prices. Deputy Prime Minister and Finance Minister Taro Aso stated that reducing the consumption tax to 5% would have an effect of 10 trillion yen as an economic measure, and some members of the ruling party are proposing reducing the consumption tax rate to 3%. 消費税は1989年に導入され、導入当初は3％だった。その後、段階的に引き上げられ、2014年には8％、2019年には10％に上がった。10％に引き上げられた際には、政府は「消費税10％への増税は、将来の社会保障を安定させるための、必要にして重要な政策」と説明していた。 The consumption tax was introduced in 1989 and was initially set at 3%. It was then gradually increased, to 8% in 2014 and to 10% in 2019. When it was raised to 10%, the government explained that the increase to 10% was a necessary and important policy to stabilize future social security. それなのに、今回、わずか3年で、消費税を5％に引き下げる検討が持ち上がっている。消費税は、社会保障の財源として使われるだけに、今回の引き下げは、将来の社会保障への影響が懸念される。 Despite this, just three years later, there is discussion of reducing the consumption tax to 5%. Since the consumption tax is used as a source of funding for social security, this reduction is a concern for the future of social security. そもそも、なぜ消費税の引き下げが支持されるのだろうか。消費税は、所得や資産の多寡にかかわらず、物を買うたび、サービスを受けるたびに課税される。そのため、負担感が大きいと指摘される。消費税は、給料などの収入から税金を納める所得税などに比べ、税金を払っている実感が薄い。 The question is, why is a consumption tax cut supported in the first place? The consumption tax is levied every time something is purchased or a service is used, regardless of income or assets. As a result, it is pointed out that there is a large sense of burden. Unlike income tax, which is paid from income such as salary, there is little sense of actually paying consumption tax. 例えば、1万円の商品を購入した場合、消費税は1,000円となる。この場合、消費税10％の内訳は、商品を購入した際に支払った1,000円と、商品を仕入れた事業者が納めた1,000円の2重の税金がかかる。このため、消費税は「痛税感」があると批判される。 For example, when purchasing a 10,000-yen product, the consumption tax is 1,000 yen. In this case, the breakdown of the 10% consumption tax is a double tax of 1,000 yen paid when purchasing the product and 1,000 yen paid by the business that supplied the product. For this reason, the consumption tax is criticized for having a "painful tax" feeling. さらに、消費税は、生活必需品の購入時も課税される。生活費の負担が重くなるため、家計への影響が大きい。 Furthermore, the consumption tax is levied when purchasing daily necessities. This increases the burden of living expenses and has a large impact on household finances. こうした消費税の特徴が、今回の引き下げ支持につながっている面がある。ただ、消費税の引き下げは、景気対策として効果があるのか、という疑問もある。 There is some aspect of these characteristics of the consumption tax that is connected to support for a reduction this time. However, there is also a question of whether a consumption tax cut would be effective as a measure to counter the economic downturn. 消費税を5％に引き下げると、約7.8兆円の税収減になる。消費税率1％は、約3.6兆円の税収がある。単純計算すると、消費税を3％に引き下げると、約21.6兆円の税収減になる。 Reducing the consumption tax to 5% would result in a reduction in tax revenue of about 7.8 trillion yen. A 1% consumption tax rate generates about 3.6 trillion yen in tax revenue. In simple terms, reducing the consumption tax to 3% would result in a reduction in tax revenue of about 21.6 trillion yen. この税収減は、すべて国と都道府県、市町村が負担することになる。消費税は、地方交付税の財源としても使われているからだ。 This reduction in tax revenue would all be borne by the national government, prefectures, and municipalities. This is because the consumption tax is also used as a source of funding for local allocation taxes. 政府は、消費税率を5％に引き下げた場合、経済効果は10兆円と試算している。しかし、税収減の7.8兆円を上回る効果を出すことは、簡単ではない。 The government calculates that reducing the consumption tax rate to 5% would have an economic effect of 10 trillion yen. However, it is not easy to achieve an effect that exceeds the 7.8 trillion yen reduction in tax revenue. 消費税の引き下げは、選挙対策や、与党内の支持取りまとめに効果的かもしれないが、将来の社会保障への影響や、地方財政への影響を考えると、簡単に決めていいことではない。 Reducing the consumption tax might be effective for election measures or for gathering support within the ruling party, but considering the impact on future social security and on local finances, it is not something that can be easily decided.

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