Bill that would restore tax on oil companies faces uphill battle in Senate

An $18 billion tax package that would withdraw a tax break for the five biggest oil companies has passed in the U.S. House of Representatives, but Democrats in the Senate face a challenge in getting enough support to bring the bill to a vote, according to news reports. President Bush and the oil industry have criticized the measure.

The legislation “conveniently ignores the fact that these companies already are paying record amounts in taxes,” said Charles T. Drevna, president of the National Petrochemical & Refiners Association (NPRA), in a statement issued before the House vote. A survey of 80 companies “shows that the three highest effective tax rates from 2004 to 2006 applied to ConocoPhillips, ExxonMobil and Chevron, rates that were roughly 13 percentage points higher than the 30 percent average effective tax rate for the companies surveyed,” Drevna said.

The House of Representatives on Feb. 27 voted 236 to 182 in favor of the tax package, which would use the increased tax revenue from the oil companies to shore up incentives for wind and solar energy and energy efficiency.

"A realistic energy policy expands and diversifies our nation's fuel mix to meet increasing demand, but the political approach we're seeing today only creates winners and losers by isolating the domestic oil and gas industry for punitive taxes that would discourage reinvestments in new technologies and facility efficiency upgrades, to say nothing of hurting its competitiveness with state-owned oil companies in unstable regions of the world,” Drevna said last month in another statement spelling out NPRA’s opposition. “For the benefit of the American consumer and global competitiveness, we'd urge Congress to consider the realistic approach to energy policy instead of the political approach."