Democrats will propose eliminating federal gas taxes for sixty days; 18 cents a gallon
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Tuesday April 25, 2006
Mulling proposal to give feds more power to target price gougers
Democrats are set to introduce a measure that would create a "federal gas tax holiday" by eliminating the federal tax on gas and diesel for sixty days, RAW STORY has learned.
The measure, proposed by Sen. Bob Menendez (D-NJ), would reduce the cost of gas by $0.184 per gallon and the cost of diesel by $0.244 per gallon. The move, aides say, will provide $200 million dollars per day in relief.
Democrats say the money will be made up by cutting six billion dollars in tax breaks to oil firms. Currently, the money from the federal gas tax goes to the Highway Trust fund.
The Democrats' move come in the wake of two decisions by President Bush today -- one, to temporarily relax environmental regulations in an effort to speed up delivery of fuel and dampen prices, and two, to halt delivery of oil to the U.S. strategic petroleum reserves.
Democrats are also working on an amendment that would give federal authorities more power to investigate price gouging, aides say. The measure could be introduced by Sen. Maria Cantwell (D-WA), who is examining the idea.
It would give more authority to the federal government to go after oil companies who are seen to be colluding to raise the price, a Senate aide said.
Senators intend to try to attach the measures to the Emergency Supplemental Appropriations Act, which is coming up for review in the Senate this week. Other measures under consideration include proposals to encourage conservation.
Menendez's proposal would do the following to taxes for big oil companies.
Foreign Oil & Gas Foreign Tax Credit and Income. Under present law, US
companies can claim a foreign tax credit for taxes paid to another country
and not royalties and similar payments related to an economic benefit.
The provision denies foreign tax credits for payments to a foreign country
if the foreign country does not have a generally applicable income tax.
LIFO Oil & Gas. Under current law, businesses are generally permitted
to use a last-in, first-out (LIFO) method to account for their
inventories. This allows companies to create a tax advantage during times
of rising prices. This proposal limits the tax benefits of this LIFO
method of accounting for integrated oil companies with gross receipts in
excess of $2 billion.
Elimination of Amortization of Geological and Geophysical Expenditures
for Large Oil & Gas Companies. Eliminates the tax break for accelerated
depreciation for these expenditures for fully integrated oil companies
that was passed in the Energy Bill.
Eliminates Royalty Relief and other Direct Spending. The amendment also
eliminates royalty relief and other direct spending for oil and gas
production incentives in Titles III and IX of the Energy Policy Act of
2005 totaling approximately $700 million. In testimony before the Senate
Judiciary Committee, the major oil company CEOs testified that they did
not need these incentives.