Congress Approves Energy And Highway Bills

by Leroy Baker, Tax-News.com, New York

02 August 2005

US lawmakers approved billions of dollars in targeted tax breaks last week as Congress completed work on the Energy and Highway bills on Friday ahead of the August recess.

The $14.5 billion energy tax bill includes a number of tax credits and incentives to encourage the more efficient use of fuel, such as a $500 tax credit for homeowners who spend money on making energy improvements to their home, a $300 credit for those who install more efficient air conditioners and credits of up to $3,400 for buyers of hybrid or diesel cars. Manufacturers of energy efficient household appliances are also eligible for tax breaks.

The final highway conference agreement is estimated at $286.5 billion over ten years and included a $940 million package of excise tax reforms, $861 million in transportation tax breaks and $607 million in offsets. The bill also contained many special interest tax breaks, including those for landscape projects, scenic roads and horse trails.

In addition, the highway bill contained many non-related tax breaks, such as those for limousine owners, fishing rods, seaplanes and the spirits industry, much to the dismay of Sen. John McCain (R - Arizona), who voted against the plan.

"This monstrosity of a conference report – which costs an astounding $286.4 billion – is both terrifying in its fiscal consequences and disappointing for the lack of fiscal discipline it represents," McCain stated.

"What will it take to make the case for fiscal sanity in Congress?" he asked.

President George W. Bush is set to sign the bill this week.

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