House Democrats propose 'windfall profits' tax on gasoline and diesel

House Democrats led by Minority Whip David Bonior (D-Mich.) Wednesday proposed a windfall profit tax on gasoline and diesel. The Gas Price Spike Act of 2001, with 12 Democratic and 1 independent co-sponsors, seeks to discourage price gouging. The bill would impose a tax on "key" oil industry profits.

May 23, 2001

2 min read

Maureen Lorenzetti
OGJ Online

WASHINGTON, DC, May 23 -- House Democrats led by Minority Whip David Bonior (D-Mich.) Wednesday proposed a "windfall profits" tax on gasoline and diesel.

The Gas Price Spike Act of 2001, sponsored by 12 Democrats and one independent, seeks to discourage price gouging.

The bill would impose a tax on "key" oil industry profits that are "above a reasonable rate of return," bill sponsors said. How much those profits would be limited was unclear, since a copy of the bill was not available.

"If oil companies are collecting excessive profits, they should be subject to a stiff tax on those excessive profits. The threat of heavy taxation will send a clear signal to oil companies that price gouging will not pay," sponsors said.

The White House and lawmakers from oil-producing states said windfall profit taxes could severely constrict supply and discourage investment at a time when the nation needs more capital poured into an aging energy delivery infrastructure. The proposal most likely will be referred to the Committee on Energy and Commerce or the Ways and Means Committee, neither of which is likely to advance legislation on the subject. A companion bill has not been introduced in the Senate.

The House bill would use revenues from the tax to fund a $6,000 tax credit to motorists who buy domestic, ultraefficient cars. It also would direct funds to the "working poor" by earmarking money for regional transit authorities so local officials can discount bus and commuter train fares.

"Providing low-cost mass transit will slow demand for gas and ease the price of gasoline, benefiting all Americans," sponsors said.

Finally, the bill would give the Justice Department authority to order the licensing of reformulated gasoline patents "at a fair and reasonable price" to all manufacturers. Bill sponsors hope that provision will lead to lower fuel prices, because refiners would not be forced to negotiate with Unocal Corp., which won a controversial court case over its reformulated gasoline patent.

Contact Maureen Lorenzetti at [email protected]