WASHINGTON, Oct 11 (AFP) - US lawmakers gave final passage Monday to a bill that ends an export tax credit found improper by the World Trade Organization, but also piles on an extra 140 billion dollars in new business tax breaks.
The legislation was spurred by the need to repeal a portion of the US tax code known as the "foreign sales corporation" and "extraterritorial income" provisions -- a five billion dollar a year tax break for exporters found to be an illegal subsidy by the WTO, which led to EU punitive tariffs on US products in March.
The Senate voted 69 to 17 to pass the measure Monday, after 280 to 141 vote in the House of Representatives last week.
The bill will end European trade sanctions, but also provides billions of dollars in unrelated tax breaks, incentives and other perks to businesses, tobacco farmers and others.
Backers of the bill said that despite the 140 billion dollar price tag, it ends up as budget neutral by raising revenues from ending the FSC break and by closing some tax loopholes.
The FSC provision is replaced with a tax cut for domestic manufacturers that will eventually bring their top corporate rate down by three percentage points to 32 percent.
The break is also extended to a number of domestic, non-manufacturing firms, including construction companies, engineering and architectural films, and the oil and gas industry.
While efforts to replace the FSC provisions with tax break for domestic manufacturers had wide support, opponents of the final package complained that lawmakers had larded the bill with perks for special interests.
The final bill includes a provision that will end a Depression-era subsidy program for tobacco growers, in return paying producers 10.1 billion dollars.
"There are those who refer to this bill as somewhat of a giveaway to business," said Republican Senator Charles Grassley.
"I don't think people are correct in saying this is a giveaway to business, because it balances out within the business sector ... We obviously want to encourage the creation of jobs and manufacturing in America, we want to reduce the reasons for outsourcing and this bill deals with all of those and some other things as well."
"It has a lot of tax cuts and it has a lot of tax increases, so you have to kind of weigh the pluses and the minuses," said Senator Don Nickles, Republican chairman of the budget committee.
"The plus is that we're going to be WTO-compliant and get away from these enormous ... taxes that are on our exports that make our exports less competitive ... We don't need a trade war with Europe."