U.S. BTU TAX HINGES ON CONFERENCE PANEL ACTION
A House-Senate conference committee will begin deliberations next week on whether to impose a BTU tax on all U.S. fuels, a 4.3 cents/gal gasoline and diesel fuel tax increase, or another measure.
The energy tax issue is key to passage of the Clinton administration's proposed $500 billion deficit reduction program. The Senate passed its version of the tax bill June 25 by a 50-49 vote. Vice President Al Gore, acting as president of the Senate, cast the fie breaking vote. One senator was absent, recovering from surgery. AU 43 Republicans in the Senate and six Democrats voted against the bill. The six were Dennis DiConcini of Arizona, Richard Bryan of Nevada, Bennett Johnston of Louisiana, Frank Lautenberg of New Jersey, Sam Nunn of Georgia, and Richard Shelby of Alabama. In key votes, the Senate rejected 50-48 an amendment by Sen. Don Nickles (R-Okla.) to delete the gasoline tax increase from the bill.
The Senate accepted an amendment to exempt jet fuel from the 4.3 cents/gal transportation fuels tax. The tax would have cost the troubled airline industry $2.53 billion during 5 years.
President Clinton called Senate passage of the tax measure a vote for "growth over gridlock" and predicted conferees will produce a bill superior to the Senate measure.
The conference committee is expected to work closely behind closed doors with the administration to produce a compromise bill before legislators leave Washington for a vacation in August.
ROADBLOCKS
Groups in the House of Representatives, where the administration's bill passed by only six votes, threaten to withhold support for the conference bill.
The congressional black caucus, with 38 votes, has vowed to oppose the Senate bill and its gasoline tax.
About 25 House Democrats are urging their leadership to drop all energy taxes from the bill and raise taxes on corporations and wealthy individuals to make up the lost revenue.
Meanwhile, Budget Director Leon Panetta continued to insist the BTU tax in the House bill is not dead.
"I think the president has always said that one of his principles in this is not only to get $500 billion in deficit reduction and keep it progressive and try to retain some of the investments in it, but he'd like a broad based energy tax as part of this.
"The House passed a broad based energy tax the Senate passed an increase in what's called transportation fuel or a 4.30 gas tax. I think somewhere in between is probably where the conference is going."
Panetta said the BTU tax could be redesigned to eliminate some concerns.
Rep. Dan Rostenkowski (D-Ill.), House ways and means committee chairman and leader of the House conferees, said, "I think 4-1/2 cents is a moderate tax on energy. I think we ought to go higher. Whether or not I'll be successful in that area, I don't know."
Rostenkowski also proposed combining the Senate's gasoline tax with a new tax on the utility bills of homeowners and businesses.
Mike Baly, American Gas Association president, said, "Although some in the administration and the House have suggested that a camouflaged BTU tax is still a possibility, such a move by the House-Senate conference committee would been a poison pill for the president's economic plan."
The American Petroleum Institute said, "Additional federal spending cuts, not tax increases, are the best way to reduce the deficit.
"We are pleased that the Senate's bill does not contain the BTU energy tax proposed by the administration and passed by the House of Representatives. We will continue to oppose the BTU tax or any disguised 'son of a BTU' substitute because they would be bad for the economy and for consumers."
Copyright 1993 Oil & Gas Journal. All Rights Reserved.