On April 10, U.S. President Barack Obama sent Congress his Budget for Fiscal Year 2014, which aims to raise more than $600 billion in new revenue in the next decade, mainly by curbing deductions of affluent taxpayers and forcing millionaires to pay a minimum tax rate of 30 percent.
The budget also looks to make tax breaks for renewable energy, energy efficiency and research and development permanent, but increase government take from the oil and gas industry by “closing of unfair tax loopholes” for oil and gas companies, which the administration says will bring in an additional $41 billion.
Included in those ‘loopholes’ is everything from eliminating deductions for intangible drilling costs and domestic manufacturing deductions; to disallowing credits on payments to foreign governments, such as petroleum taxes, and eliminating $150 million in research and development programs.
Obama’s budget plan would also impose a new $4-per-acre, use-it-or-lose-it fee on all new non-producing federal oil and gas leases and restore $18.7 billion in Superfund taxes that help pay for the cleanup of high risk hazardous waste sites, including an excise tax of 9.7 cents a barrel on crude.
Finally, it would repeal the “last in, first out” accounting technique, which allows inventories to be valued at the most recent price paid when computing net profit and taxable revenue.
Spared in the president’s plan are master limited partnerships.
What’s missing from the president’s proposed budget is any mention of Keystone XL oil pipeline.
But House Republicans have included funding for the project in their budget.
Republican efforts were bolstered in March when the Senate passed a bipartisan symbolic measure to give Congress the power to green-light Keystone XL later in the year.
The Northern Route Approval Act, which both removes the need for a presidential permit and grants other federal approvals and authorizations needed for construction, was discussed in House Energy and Commerce Subcommittee on Energy and Power the same day Obama released his budget plan.
Committee members didn’t talk about whether the legislation could overcome a White House veto or pass constitutional muster, press reports said.
Similar legislation co-sponsored by Democratic Sens. Max Baucus and Jon Tester of Montana is pending in the Senate.
As for the president’s proposed tax hits for the oil industry, after failing to implement them for four consecutive years, Republican leaders say they are unlikely to receive Congressional approval.
—Kay Cashman
