Clean | Green | Sustainable

More on Pulp Industry’s Billion Dollar Taxpayer Boondoggle

Posted by Matthew Koehler on July 8, 2009

Last month I wrote about how the US pulp and paper industry has figured out how to use an unintended tax loophole in the 2005 highway bill to basically transfer up to $10 billion in taxpayer funds right into their own packets.  Essentially every man, woman and child in the US is being forced to give $30 to the industrial dinosaurs in the pulp and paper industry.

Well, today I stumbled across some more information about this boondoggle courtesy of a new report in the  North American Wood Fiber Review.

According to the report:

In 2008, US pulp companies started to take advantage of a loophole in the US tax law, which will result in an influx of billions of [US taxpayer] dollars to a struggling industry. The tax credit was originally introduced in 2005 to encourage the use of alternative fuel over fossil fuel for cars and trucks. However, since late 2008, chemical pulp producing mills started to take advantage of the credit….These additional [US taxpayer] funds to the US pulp and paper industry, which is estimated to be valued between $3 billion to $8 billion dollars total in 2009, has been particularly helpful this year because many mills have been running with very low, if any, profit margins.

Wait, isn’t that “socialism?” But hold on, there’s more!

Without a doubt, many paper companies would have reduced their production of pulp this year had it not been for the black liquor tax credit….It is still uncertain how much longer the tax credit, or subsidy, will be in place. The US administration and a number of senators would like to see the program ended as soon as possible. Therefore, it may very well be that from October 1st 2009, US pulpmills will have to run without the support of the US taxpayers.

Oh great! So you mean that the pulp and paper industry would have actually had to reduce the amount of pulp and paper they produced without US Taxpayers giving the pulp and paper industry $8 billion in tax credits! So taxpayers not only get to foot this $8 billion bill, but we also get stuck with all these unneeded, wasteful paper and packaging products? Is this about the furthest thing from enlightened environmental policy you’ve ever heard of?

Please contact Senator Max Baucus and ask him to end this tax loophole as soon as possible. You can email Senator Baucus via his website or call his DC office directly at: (202) 224-2651.

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