WATCHING WASHINGTON TAX PROBLEMS GO TO CONFERENCE

With Patrick Crow Congressional conferees face many problems as they begin to merge House and Senate U.S. deficit reduction bills. The major problem is energy taxes. The bill passed by the House would impose a broad BTU tax on all energy, with a double tax on products refined from crude oil. The Senate bill would simply increase the federal excise tax on gasoline and diesel fuel 4.3 cents/gal.

July 12, 1993

3 min read

Congressional conferees face many problems as they begin to merge House and Senate U.S. deficit reduction bills.

The major problem is energy taxes.

The bill passed by the House would impose a broad BTU tax on all energy, with a double tax on products refined from crude oil. The Senate bill would simply increase the federal excise tax on gasoline and diesel fuel 4.3 cents/gal.

DIFFERENT APPROACHES

Because those approaches are so different and because both forms of taxation have many opponents, some House members are urging that the final bill contain no energy tax. They said enough revenue could be raised by increasing taxes on corporations and the wealthy.

Democratic leaders in Congress quickly squelched that. They declared the bill would have an energy tax and because they will control the conference, the issue appears closed.

Other blocks are forming in Congress, threatening to vote against a bill that does or does not contain specific energy taxes. The BTU tax appears to hold the upper hand.

The Clinton administration, which is working closely with Democratic congressional leaders, still wants a BTU tax.

Senate conferees are unlikely to insist too long on keeping the gasoline tax increase. It was an idea forced on Sen. Daniel Patrick Moynihan (D-N.Y.), finance committee chairman. He will lead the Senate conferees.

And pointedly, the two senators most responsible for the gasoline tax John Breaux (D-La.) and David Boren (D-Okla.) were not named to the conference.

On the House side, Rep. Dan Rostenkowski (D-Ill.), House ways and means committee chairman and leader of House conferees, sees a potential compromise. He proposes a gasoline tax increase--possibly higher than the Senate bill--along with an excise tax on natural gas and electricity use.

The American Energy Alliance, a coalition of 2,100 companies and associations, has been battling the BTU tax. It released a survey that claimed the BTU tax is opposed by 57% of Americans and supported by only 36%.

The Cambridge Reports/Research International survey found those who strongly oppose a broad based energy tax outnumber those who strongly support it 4-1.

Paul Huard, of the National Association of Manufacturers, said, "This poll sends a strong message to President Clinton and Congress that the BTU tax--or anything that looks or acts like it--should be dropped once and for all."

DEADLINE AHEAD

House and Senate conferees will try to draft a bill by Aug. 6, when Congress is due to leave for a month long vacation. It's one of those artificial deadlines that forces last minute concessions and helps Congress resolve divisive issues.

But don't expect many compromises before then. As Rep. Phil Sharp (D-Ind.) recently observed, "Everyone has to be falling off the cliff before anyone will reach out."