WATCHING WASHINGTON MARCHING TOWARD A TAX INCREASE

With Patrick Crow A congressional conference committee seems to be moving smoothly toward an agreement that would increase the federal tax on gasoline and diesel fuel but impose no other energy taxes. The committee began making progress last week on the $500 billion deficit reduction bill. Treasury Sec. Lloyd Bentsen and Leon Panetta, Office of Management and Budget director, said the conferees were moving toward acceptance of most provisions in the bill passed by the Senate.

July 26, 1993

3 min read

A congressional conference committee seems to be moving smoothly toward an agreement that would increase the federal tax on gasoline and diesel fuel but impose no other energy taxes.

The committee began making progress last week on the $500 billion deficit reduction bill.

Treasury Sec. Lloyd Bentsen and Leon Panetta, Office of Management and Budget director, said the conferees were moving toward acceptance of most provisions in the bill passed by the Senate.

That measure includes a 4.3cts/gal gasoline and diesel fuel tax increase designed to raise $23 billion during 5 years rather than the House bill's BTU tax, which would garner $72 billion. Federal taxes amount to 14.1cts/gal on gasoline and 20.1cts/gal on diesel fuel at present.

PROGRESS AND A BATTLE

Progress was assured after Panetta, speaking for the administration, finally conceded the BTU tax is dead. "We're looking more at a gasoline tax than a BTU tax or a utility tax of any kind."

Rep. Dan Rostenkowski (D-Ill.), House ways and means committee chairman, had favored combining the gasoline tax with a federal "utility" tax consumers would pay for natural gas and electricity.

The American Gas Association and Edison Electric Institute were preparing to battle the utility tax. AGA Pres. Mike Baly said, "We believe our customers do not want to pay a federal tax every time they cook dinner or take a shower."

The key remaining question is the size of the gasoline tax increase. The administration wants about a 6cts/gal increase to keep the bill at $500 billion rather than the 4.3cts in the Senate bill.

Sen. Daniel Patrick Moynihan (D-N.Y.), who as finance committee chairman leads Senate conferees, sought the support of his colleagues for a 6.8cts/gal gasoline tax increase for 5 years but failed to get it.

To make up some of the revenue shortfall, conferees tentatively agreed to a 1 percentage point increase to 35% in the top corporate tax rate and was considering an increase in income taxes for wealthy Americans.

They also agreed to restrict tax deductions large corporations can claim for payments to their top executives in excess of $1 million/year.

THE LAST 10%

House and Senate bills were about 90% in agreement going into the conference, but the other 10% involves huge sums of money and is very difficult to reconcile.

Democratic leaders wanted the conference to complete work before Congress departs Aug. 6 for a 1 month vacation.

Things are going so well, House Majority Leader Richard Gephardt (D-Mo.) predicted not only would the bill be finished, but both Houses would pass it and send it to President Clinton before then.

Because Democrats control the conference under the guidance of the White House, that may not be unrealistic.

But many wonder if the final bill, representing even more compromises, will be acceptable to a majority in both houses, especially because the initial bills passed by razor thin margins: 219-213 in the House and 50-49 in the Senate.