Posted on 02/28/2009 10:17:38 AM PST by FBD
The Obama administration Thursday proposed raising at least $31.5 billion over 10 years from oil and gas companies, reflecting a repeal of tax breaks for domestic production and new charges on oil and gas production in the Gulf of Mexico.
The plans, outlined as part of a fiscal 2010 budget proposal, revive long-standing Democratic efforts to turn to the oil and gas
industry as a source of funding for other priorities. Among other things, the Obama budget plan calls for about $13 billion over 10 years in new charges on oil and gas companies from the repeal of a tax deduction for domestic production.
"It's a concerning area, of course, because as you put more royalty and tax burdens on the industry, particularly a cyclical industry, you just have to be cognizant of the potential impact it has on investments," said Marvin Odum, the president of Royal Dutch Shell's (RDSA) U.S. operations, after meetings with various lawmakers about energy policy. "That's not something you can put real definition to, but I think it's a concern."
Oil companies have been fighting to maintain the tax treatment, which they say keeps jobs in the U.S. by encouraging domestic production. Congress scaled back the tax deduction last year to help pay for an extension of tax breaks for the solar and wind industries, but stopped short of eliminating it entirely.
The Obama administration also proposed a new excise tax on oil and gas production in the Gulf of Mexico, saying it would raise about $5 billion over the next 10 years. The White House said that the new tax, along with plans to charge user fees to oil companies for processing oil and gas drilling permits on federal lands, would "ensure that federal taxpayers receive their fair share" and "close loopholes that have given oil companies excessive royalty relief." The tax "will begin in 2011, after the economy has had time to recover," the White House said.
Democrats have been battling oil firms to get royalty payments from Gulf of Mexico leases signed in the late 1990s, years when the government apparently accidentally left price triggers out of contracts. Government auditors say that the omission could ultimately short change taxpayer coffers by billions of dollars.
Six companies -- including BP PLC, Royal Dutch Shell, ConocoPhillips and Marathon Oil Corp. - - originally agreed to pay royalties on the leases for production from October 2006, but not on past output. But that agreement wasn't finalized, and negotiations stalled after lawmakers pressed for payment on past output and after a court ruling in favor of the oil industry. The firms only represented a fraction of the total lease owners.
Around 40 companies representing 80% of the production haven't agreed to re-negotiate the leases, including Exxon Mobil Corp., Total SA, Chevron Corp. and Anadarko Petroleum Corp., according to Interior Department data.
Interior Secretary Ken Salazar and key Congressional Democrats have promised to reform the structure of fees and royalties on public lands, and a senior Office of Management and Budget official said the new oil industry taxes would help to "re-balance the tax system."
"This budget begins that process, that conversation on finding ways to rebalance the tax system over so that we can get at the $1.3 trillion deficit that we inherited," the official said.
Copyright (c) 2009 Dow Jones & Company, Inc.
Hello to higher energy prices.
Is anyone else getting tired of hearing this “deficit that we inherited” line?
They own the deficit now, and have every intention of increasing it.
Let’s get at that one trillion dollar deficit we’ve inherited by running up the deficit three fold. That’s sure to work. Oh, and we’ll tax the hell out of gas companies, driving energy bills up threefold, all to gain a measly $5 billion dollars.
ping
Middle and low income people will take the hardest hit on this with rate increases. Of course, the MSM will not tell them.
I see $10 gas soon.
I couldn't stand to hear Bill Clinton's voice...but now it would be music by comparison. I hate the tone, rhythm, and the meaning of Obama's words.
Notice that the tax increases don’t come until after 2010 elections? If the economy recovers by then, these taxes will drive it right back down into the abyss again.
And the hits just keep coming. New taxes on tobacco products hit on April first and I haven’t checked but it sounds like there may be new alcohol taxes too.
They've managed to revive and implement every Dem wet dream proposal over the last 30 years.
At a huge cost to the America people.
And this is only their 1st month in office.
Gonna be a long 4 years.
The socialist hate trickle down economics, but favor tsunmai taxation tyrannics.
The FOOL and OUR money will soon be parted!
The stupid oil and gas industry is no different than GM or Chrysler - they have slowly allowed their product to be targeted and not fought back. Gm via Toyota and Exxon (oil/gas) via The Green lobby. If Oil and gas started right now to talk about how HIGH gas prices will return with a better economy AND that the congress is killing all chances for domestic drilling. Congress is killing jobs - say it again they are killing jobs. But with record profits in hand the oil industry is going to let the congress kill jobs and kill them too. They make money off cheap foreign oil and short term ideas. They lose the growth market by killing jobs.
How about the old line it’s taking away billions of money from the taxpayer. We know that isn’t true. Someone should hold these politicians feet to fire on that. The taxpayer never sees a dime.
You have no idea what you are talking about.
I was tired of that lie the first time I heard it.
/ idiot DU / Politician / liberal mode
..I hate the tone, rhythm, and the meaning of O'bummer's words.
Thank you, I can't even get that far, as soon as I see him or any reference to him I have to turn away (thoughts of Lot's wife, etc.).
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.