|
|
Oil Import Tax: Turmoil
| Article
# : |
10028 |
|
|
Section : |
CURRENT ISSUES
|
| Issue
Date : |
4 / 1986 |
1,387 Words |
| Author
: |
Wayne E. Gable
|
The recent plunge in oil prices has been welcome economic news for the United States. Economists predict the decline in oil prices will add up to several percentage points of the Gross National Product (GNP) in 1985, further reduce inflation, and continue to exert downward pressure on interest rates. The rosy scenario has added impetus to a stock market boom, with the Dow-Jones average already reaching record highs on several occasions this year. Unfortunately, this silver cloud may have a dark lining.
With exception of certain oil producing states like Texas, Oklahoma, Alaska, and Louisiana, most Americans feel the drop in oil prices was long overdue. A pernicious alliance between high-tax advocates and oil state protectionists has seized the issue of falling prices as an excuse to promote plans for an oil import tax. Though strange bedfellows with vastly different objectives, they have come together in an attempt to prevent American consumers from reaping the benefits of lower energy prices. It has been estimated that a $5/barrel oil import fee would cost American consumers $20 billion a year. This figures out to $300 per year for the average family of four. Consumers would thus pay as much as $.12 per gallon more for gasoline, home heating oil, and other petroleum products.
The tax advocates have an ideological motive for their position. Distressed that the president has cut taxes and slowed the increase in government growth, they want to perpetuate the federal government's role as an engine for redistributing wealth. Passage of the Gramm-Rudman-Hollings deficit reduction measure created a crisis for the liberal high tax advocates. In the past they had been relatively successful in thwarting the president's initiatives to cut wasteful government spending. With the limitations imposed by Gramm-Rudman-Hollings, the choice came down to spending cuts or tax hikes. Yet, the advocates of tax hikes overestimated the returns from a tax. Estimates of deficit reduction are in the $8-9 billion range. Compare this number with the extra $20 billion that consumers will have to pay for oil products, and the gross inefficiency of an oil import fee as a revenue source is revealed.
Though seeking to perpetuate the welfare state, high-tax advocates recognize that an open assault on the American people would likely fail. Thus, finding a means to makes their proposed tax hike has become a virtual obsession. This helps explain the newfound appeal of oil import "fees" which would hide a hefty tax increase inside local gas pumps. The drop in oil prices presents the opportunity of creating a new tax that would be "painless." The high-tax advocates contend oil prices will remain the same, but the government will collect the revenue instead of OPEC.
Joined in an unholy alliance with the taxers are oil state senators who see an oil import fee as a way to protect oil interests from overseas competition. Although it is never referred to as a protectionist measure, its intention and effects would be the same as any other protectionist legislation. Apparently, these senators feel it was okay for domestic producers to profit when oil prices were held artificially high by OPEC, but now that the market seems to be dictating the price, government protection is needed. While there is certainly nothing wrong with companies making profits, the free enterprise system involves risk. It is hypocritical to demand government aid when times are tough and to scream if government intervenes when things are going
...
Read Full Article
|
|
