The oil and gas industry, which beat back new regulatory bills even during the worst days of last year's massive BP oil spill in the Gulf of Mexico, scored another victory this week. The Senate voted late Wednesday against a proposal to end some oil industry tax breaks to pay for easing paperwork requirements for small business under President...
The oil and gas industry, which beat back new regulatory bills even during the worst days of last year's massive BP oil spill in the Gulf of Mexico, scored another victory this week.
View full sizeSen. Carl Levin, D-Mich., said it makes little sense to continue tax breaks for an industry that is doing so well, despite the BP oil spill and a slowly recovering economy. The Senate voted late Wednesday against a proposal to end some oil industry tax breaks to pay for easing paperwork requirements for small business under President Barack Obama's health overhaul law.
Instead, the Senate passed an alternative, using unappropriated federal funds, to pay for the $22 billion estimated cost over 10 years of the small-business provision. It would drop a requirement that, starting next year, small businesses file IRS forms every time they make purchases of services or goods worth $600 or more.
The repeal measure passed 81-17. Opponents of ending tax breaks for oil companies, including Louisiana lawmakers, argued that now is not the time to impose taxes on an industry that is struggling to regain domestic offshore production after an embargo and what some industry officials call a continuing de facto embargo on offshore drilling.
The American Petroleum Institute said further taxes would hurt an industry that already produces $100 million in daily revenue for the U.S. Treasury.
Still, Sen. Carl Levin, D-Mich., a proponent of ending oil industry tax breaks, said it makes little sense to continue tax breaks for an industry that is doing so well, despite the BP oil spill and a slowly recovering economy.
"We would reform unjustified tax expenditures related to oil and gas production by large oil companies, companies that are enormously profitable with or without these tax expenditures," Levin said.
His amendment failed by a vote of 44-54. Ultimately, the Senate passed the repeal of the IRS reporting provision, letting the Office of Budget and Management choose unappropriated funds to cover the $22 billion cost.
On Thursday, Rep. Ed Markey, D-Mass, continued to press the issue of ending oil company tax breaks, which Obama endorsed during last week's State of the Union address.
"American consumers and small businesses are all told that they will have to tighten their belts, and do their share to bring down our deficit and grow our economy," Markey said. "Yet even when their top five companies make nearly $1 trillion in profits over the last 10 years, they still defend with a straight face the billions in tax breaks and regulatory subsidies they stand to rake in over the next decade."
Sen. David Vitter, R-La., said that Markey clearly doesn't understand the role domestic production provides in terms of jobs and alternatives to unstable foreign oil.
"I wish Ed Markey would travel from Massachusetts to Louisiana and meet face-to-face with workers who've lost their jobs because of the Obama shutdown of the Gulf," Vitter said. "Ed Markey supports that shutdown. And the reason we have and need these tax provisions is because the U.S. has the highest business tax rate in the world, which Ed Markey also supports."
On Thursday, Vitter also demanded the Interior Department calculate how much of a hit the federal treasury may take if breach of contract suits against the Department of Interior, like that filed last week by Century Exploration New Orleans Inc., are successful. Century filed suit in Washington, claiming that new regulations imposed by Interior after the BP oil disaster had rendered its $23 million Gulf of Mexico lease "commercially impractical."
In a letter to Deputy Interior Secretary David Hayes, Vitter asks if Interior is held liable for breach of contract, how many contracts that might include, and what the impact on the federal treasury would be of a fall-off in production because of the new regulatory regime.
Also Thursday, Rep. Steve Scalise, R-Jefferson, said that with oil prices rising because of instability in Egypt, now is not the time to restrict domestic production through higher taxes or regulations.
Washington reporter Jonathan Tilove contributed to this report. Bruce Alpert can be reached at balpert@timespicayune.com or 202.383.7861.