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Public Radio's Environmental News Magazine (follow us on Google News)

Energy Tax, Gas Tax...Or No Tax at All

Air Date: Week of

Host Steve Curwood discusses the next step in the fight over the proposed energy tax with New York Times reporter Steven Greenhouse.


CURWOOD: Senate and House negotiators are hard at work on a compromise for President Clinton's deficit-reduction package, and one of the key points of contention is the energy tax. The President initially proposed a broad-based tax on nearly all forms of energy. The so-called BTU tax would've raised more than 70 billion dollars in new revenue, and it was also intended to promote energy efficiency and so help to reduce pollution. The House passed a slightly scaled-back version of this plan, but the Senate version is much different. In place of the tax on all fuels, Senators approved only a modest hike in the tax on gasoline. Stephen Greenhouse has been covering the budget process for the New York Times, and he joins us now from Washington. Stephen, we know that the Senate's gas tax hike doesn't raise as much revenue as the House version would. What about its impact on the environment?

GREENHOUSE: I don't think the Senate gasoline tax will do much on the environment. It raises the price of gasoline by four, four and a half cents a gallon which is very small. People say that the price of gasoline this summer will probably be 4, 5, 6 cents lower than it was at the beginning of the year. We hardly noticed that the price of gasoline is lower; we'll probably hardly notice that the effects of a tax of 4, 4 and a half cents. It will probably have very little effect on consumption, and thus it will probably have very little effect on conservation and the environment.

CURWOOD: Now the whole energy tax package, including the BTU plan, was designed to set up a national policy that would promote energy efficiency over consumption, kind of gradually raise the tax, the cost of energy so that people would use it more efficiently. Now the Senate version pretty much tosses it out, doesn't it?

GREENHOUSE: Yes. Environmentalists liked the President's plan because one of the objectives of the BTU tax was to get consumers, get companies to use cleaner fuels, get them to use natural gas more, get them to use coal less. And natural gas burns cleaner, produces less carbon dioxide per unit of energy, and thereby would very much be environmentally friendly. The gasoline tax doesn't really shift consumption away from coal towards cleaner natural gas, and the gasoline tax - the BTU tax would have gone about one-fifth of the way towards achieving the Administration's goal of stabilizing and reducing carbon dioxide emissions. The gasoline tax, the 4, 4 and a half cent tax would go only 1/25th of the way.

CURWOOD: Now does this mean that the Senate is hostile to an environmental plan for energy use?

GREENHOUSE: Not exactly. What the Senate is hostile to is more taxes, especially energy taxes. There are some very powerful Senators from energy states who hate the idea of energy taxes. Now if you ask them, do you oppose environment taxes? they'd say, no, no, we want to do everything we can for the environment. The problem is the taxes that will help the environment most are energy taxes and these guys are generally against energy taxes.

CURWOOD: Okay, so now we have a House version which I think only passed by about ten votes, and we have this Senate version which passed with one vote, that of the Vice President. What's going to happen when the House and Senate come together in a conference committee?

GREENHOUSE: The conference committee and the President are walking a very, very fine line to get an energy tax that will not alienate the environmentalists on one hand and not alienate the conservative energy state Senators on the other. I see two possibilities. The first would be developing a hybrid tax: take the Senate's basic gasoline tax and perhaps add on, draft on a few aspects of the BTU tax. Senator Moynihan, Treasury Secretary Bentsen have talked about a BTU tax, but just on consumers, so maybe that tax would be a gasoline tax plus charging home consumption of fuel, electricity at home, oil burning at home, natural gas at home, and not extend the BTU tax to manufacturers who complain that it hurts their competitiveness. Now that would be higher, that would be more expensive than the gasoline tax, and perhaps some Senators might vote against it. The second option would be just dropping an energy tax altogether; that of course would be bad for the environment.

CURWOOD: Now, why dump even a gasoline tax?

GREENHOUSE: Because some people in the House might say, well, a gasoline tax is not enough of an energy tax, if we're going to do it let's do it right. Also the Administration might be so desperate to round up votes to approve its package that it might decide the only way to ensure victory is to drop an energy tax altogether.

CURWOOD: Okay, now, I want you to polish your crystal ball for a moment, Steve. Which of these two options do you think is likely to prevail - are we likely to see a modified gas tax or a modified BTU tax, or are we likely to see no energy tax at all, do you think?

GREENHOUSE: I was debating this yesterday in the office with some other reporters. I think they will come up with a modified, we'll call it a gasoline tax plus. I think they'll shy away from the name BTU tax, but it'll be a gasoline tax with a few other components. But some other reporters in the Times bureau are sure that they will abandon an energy tax altogether, because that might be the surest way to get the package through the House and the Senate.

CURWOOD: I want to thank you very much. Stephen Greenhouse is the Washington bureau reporter for the New York Times. Thanks for joining us.

GREENHOUSE: Pleasure talking with you.



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