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President Obama's Budget To Include New Oil Tax

by Mike Godfrey, Tax-News.com, Washington

08 February 2016


President Barack Obama has indicated that he will propose a new tax on oil to finance infrastructural investments in the United States, as part of his last federal Budget plan for the 2017 fiscal year.

According to a statement from the Administration, the plan will continue President Obama's "call to use the one-time revenues from pro-growth business tax reform to fund a temporary near-term surge in investment, while the oil fee will play for the long-term investments needed to put us on the right path for the years ahead."

The new USD10 per barrel tax on oil paid by oil companies would be gradually phased in over five years, to pay for new investments to reduce the US's "reliance on oil and cut carbon pollution from our transportation sector, which today accounts for nearly 30 percent of US greenhouse gas emissions, … [and] expand clean, reliable, and safe transportation options like public transit and rail."

"By placing a fee on oil," a White House fact sheet stated, "the President's plan creates a clear incentive for private sector innovation to reduce our reliance on oil and at the same time invests in clean energy technologies that will power our future."

However, the President's plan received a completely negative response from Republican lawmakers in Congress. For example, the House of Representatives Speaker, Paul Ryan (R – Wisconsin), commented: "When we laid out our expectations for the President's last budget, we predicted new tax hikes. After all, how are you going to pay for all that new spending? But even we didn't see this one coming."

He noted that the "outrageous" oil tax proposal "would hurt Americans all over the country, raising their energy costs." He confirmed that the Republican party "will never let this harmful proposal become law."

Chairman of the House Ways and Means Committee Kevin Brady (R – Texas) added the President's Budget "will include job-killing energy tax hikes on every American – including those with low incomes who can least afford it."

TAGS: tax | business | fiscal policy | law | budget | oil and gas | United States | tax reform | construction

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