WASHINGTON -- The Clinton administration unveiled its plan Wednesday for a broad-based tax, pegged to the amount of energy in fuels, that would double levies on oil compared with other sources of energy.
The administration's proposal would put a tax on a fuel's capicity to produce heat, which is measuered in British Thermal Units (BTU).
'President Clinton's decision to propose a broad-based energy tax shows leadership and a deep understanding of the energy problems facing our nation,' Energy Department Secretary Hazel O'Leary said in a statement.
The administration's plan calls for placing a base tax per million BTUs of 25.7 cents on natural gas, coal, hydro-power and nuclear fuel and 59.9 cents on both imported and domestic oil. Wind and solar energy would be excluded from the tax. Energy department officials discussed the details of the plan at a news briefing Wednesday.
Officials said consumers will see a slight increase in fuel prices by the time the tax goes into full effect. For example, by the year 2,000, consumers could see increases of 4.3 percent for a gallon of gas, 5.4 percent for home heating oil and 3.7 percent for electricity.
The plan is designed to give more priority to cleaner forms of energy. But coal, which releases more carbon dioxide into the air than other fuels, is being taxed at the same rate as other forms of energy because the BTU content per ton of coal is higher compared with others such as natural gas. Therefore the total tax per ton of coal is higher compared to an equivalent amount of natural gas, energy officials said.
The taxes will begin to be enacted by July 1, 1991 and will go into full effect by July 1, 1996. The Treasury Department estimates the tax could bring in 71.4 billion in revenue by 1998.
The taxes will be imposed at the pipeline for gas, the mining mouth for coal and at the refinery for oil.
The tax was designed to accomplish several objectives including reducing the nation's dependence on imported oil, conserving energy and promoting more the use of more environmentally sound fuels and raising revenues for deficit reduction. In addition, they also looked at the regional differences in fuel use and the regressitivity of the tax.
'The proposal will increase our energy efficiency and reduce our reliance on unstable foreign sources of oil,' O'Leary said.
The tax on oil is expected to reduce the trade imbalance of foreign imports by $18.8 billion by the year 2000.
And even though the taxes will not reduce the overall use of fuels, they should slow down the growth, Energy Department officials said.
'The effect is to prevent them from growing faster,' a senior Energy Department official said.
The plan has been praised by some environmental groups as a good start developing a policy that promotes the use of more environmentally- safe fuels.
'We think its an important first step in dealing with global warming,' said Bill Roberts, legislative director for the Environmental Defense Fund. 'The key ingredient is to make the nation more energy efficient.'
Gas and oil industry officials, however, said any type of energy tax can only have a negative effect on the economy and is not the best way to reduce the deficit.
'This proposal really amounts to a thinly disguised gasoline tax, one that would seriously harm economic recovery and be a job killer on a mammoth scale,' said Charles J. DiBona, president of the American Petroleum Institute.