White House may endorse temporary cut in gasoline tax

The White House may endorse a temporary reduction in the 18.4¢/gal federal excise tax on gasoline, oil industry lobbyists say. But some cabinet members may oppose a repeal since the action would cut revenues for the federal highway trust fund, which is used for road construction and repair.


By Maureen LorenzettiOGJ Online

WASHINGTON, DC, May 11 -- The White House may endorse a temporary reduction or repeal of the 18.4¢/gal federal excise tax on gasoline if Congress pushes it, oil industry lobbyists say.

The White House has generally resisted the idea of a gasoline tax reduction, saying it would be a "quick fix" that would not alleviate the supply, refining, and transportation problems that led to higher prices.

Yet renewed pressure from congressional Democrats to offer short-term solutions has not been lost on the White House either (OGJ Online, May 10, 2001).

Lobbyists say Republican pollsters fear that higher fuel prices and electric power problems could create lingering political headaches that could hurt the party in the 2002 congressional elections, and possibly cost it control of the House or Senate.

Gasoline prices have soared recently and the Bush administration does not want to appear passive. But exactly how much this or any other president can do in the short-term remains an open question.

To help push his long-term solutions, Bush will unveil his energy task force's recommendations May 17 during an event at Minnesota power plant.

The report is expected to include broad recommendations on how to improve domestic supplies through increased access to federal land and water resources, retool clean fuel rules that strain pipeline delivery systems, and offer tax incentives to expand technology that can be used to build cleaner power plants and refineries. The report also is expected to call for a study on possible increases in automobile fuel economy standards.

However, it will not suggest repealing gasoline taxes. The Bush administration has insisted the nation needs a long-term approach to its current energy problems. And some cabinet members may want Bush to resist any congressional action that rolls back even a portion of the tax.

Transportation Sec. Norman Mineta, a Democrat, is likely to be a vocal advocate for keeping the excise taxes in place. Any tax repeal would lower revenues for the federal highway trust fund, which is used for road construction and repair. Another moderate in the cabinet, Treasury Sec. Paul O'Neill, advocated a btu tax when he was an advisor to former President Gerald Ford and is not expected to be an enthusiastic supporter of a gasoline tax repeal, lobbyists predict.

Meanwhile, high-level administration officials told various congressional panels May 10 that the White House is working hard to address energy problems, especially in the Midwest and in California.

Energy Sec. Spencer Abraham told reporters following a session with Committee on Energy and Natural Resources Chairman Sen. Frank Murkowski (R-Alas.) that his department would investigate whether retail station owners in the Midwest and California may be preparing to raise gasoline prices to $3/gal.

However, White House officials said the probe would not be connected with any formal investigation by the Federal Trade Commission. They said President Bush had instructed all government agencies to be "vigilant" about ensuring consumers are not overpaying for gasoline.

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