WATCHING WASHINGTON CLINTON'S BTU STARTING TO FALL APART

With Patrick Crow The Clinton administration's BTU tax proposal is beginning to crumble. Democrats on the House ways and means committee were working on the tax plan behind closed doors last week and appeared to be only a few days away from agreeing on a revised bill. A major change came after President Clinton agreed to an amendment by Rep. Bill Brewster (D-Okla.) to make consumers, not local distribution companies (LDCs), liable for paving the BTU tax on natural gas.

May 17, 1993

3 min read

The Clinton administration's BTU tax proposal is beginning to crumble.

Democrats on the House ways and means committee were working on the tax plan behind closed doors last week and appeared to be only a few days away from agreeing on a revised bill.

FIXING THE BLAME

A major change came after President Clinton agreed to an amendment by Rep. Bill Brewster (D-Okla.) to make consumers, not local distribution companies (LDCs), liable for paving the BTU tax on natural gas.

That means gas consumers probably will see the tax itemized on their bill, a clear blame for higher gas prices the administration wanted to avoid.

LDCs said the alternative would force them to reopen their rate filings with state regulatory commissions, and other major gas associations supported them.

However in the end the administration simply recognized Brewster had the votes for his amendment in the committee.

If other tradeoffs can be arranged, Brewster thinks he may be able to shift the collection point for the BTU tax on oil from the refinery gate to the terminal rack.

That would please refiners because it would move the tax closer to the consumer and allow the revenues to be collected through a system parallel to the present gasoline tax collection system.

When the House finishes its work, the BTU tax will go before an increasingly skeptical Senate finance committee.

There, the Independent Petroleum Association of America will seek an amendment to give operators a credit equal to the BTU tax they will pay on the energy they use to produce economically marginal wells. Their goal is to prevent the BTU tax from costing the nation any oil or gas production.

"We have to come up with a plan that's politically acceptable as well as one that's as targeted to the problem as possible," an IPAA official said.

Charles DiBona, American Petroleum Institute president, said his group isn't interested in modifying the BTU tax--just in killing it.

He said, "It's important to do what we can to change the tax in the ways and means committee, but the place we have the best opportunity to win is in the Senate finance committee."

DiBona is encouraged by increasing opposition to the tax in farming states. "I think we have a chance of killing this. When we started, it was really an uphill battle."

MORE TROUBLE

There also were some strong indications last week the BTU tax is indeed in serious trouble.

Sen. John Breaux (D-La.), a finance committee member whose vote is crucial, urged the administration to abandon the BTU tax in favor of a simple 10 cents/gal gasoline tax increase.

And the nation's largest business organization, the U.S. Chamber of Commerce, stopped trying to win changes in the administration's plan and started working to kill it.

Richard Lesher, chamber president, explained the proposal has "entirely too much in terms of tax increases and very little in terms of spending reduction."