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Senate rejects windfall profits tax on Big Oil

November 17, 2005

By Tom Doggett

WASHINGTON (Reuters) – The U.S. Senate on Thursday rejected
by a wide margin a Democratic proposal to impose a windfall
profits tax on the record earnings of big oil companies and
give the proceeds to American consumers.

Byron Dorgan of North Dakota offered an amendment to a
broad tax bill that would have levied a 50 percent tax on the
profits earned by oil companies on crude oil sold above $40 a
barrel, unless the companies invested those earnings in more
domestic oil and natural gas production or to increase refinery
capacity.

Lawmakers voted 35 (yes) to 64 (no) on waiving the Senate’s
budget rules so a final vote on the tax proposal could proceed.
That was way short of the 60 “yes” votes required.

Opponents to the windfall profits tax said it would
discourage companies from boosting their oil production when
the United States needs to be less dependent on foreign
suppliers.

“We’ve made it almost impossible to develop our own natural
resources,” said Republican Orrin Hatch of Utah.

The Senate is expected to clear this week the overall bill,
which aims to cut taxes by about $60 billion over five years
and is part of a push by Republicans to continue President
George W. Bush’s tax cuts.

The bill has other provisions that would remove several tax
breaks for large oil companies.

One is an accounting change that modifies the way oil
companies value their oil inventories, which would require the
biggest companies to pay about $5 billion in extra taxes.
Another would eliminate a $1 billion tax break for certain
costs incurred from oil and natural gas exploration.

A related tax bill in the House of Representatives would
not restrict those two oil tax breaks. Differences between each
chamber’s bill would have to be worked out in final
legislation.

The Senate also rejected by 48 to 51 a proposal to repeal a
tax break worth up to $500 million a year that allows big oil
companies to write off their drilling costs more quickly.

“The oil companies have said they don’t need it. The
president of the United States has said they don’t need it,”
said Democrat Dianne Feinstein of California, who sponsored the
proposal.

Separately, a Democratic amendment aimed at protecting
consumers from market manipulation and profiteering at the
gasoline pump failed in a 57 to 42 vote. Again, 60 “yes” votes
were needed to waive the budget rules on the proposal to give
the Federal Trade Commission more authority to go after
companies that engage price gouging.


Source: reuters



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