Democratic lawmakers today introduced legislation that aligns with President Joe Biden's plan to pay for a $2 trillion infrastructure bill partially by eliminating billions of dollars of "subsidies" for fossil fuels.
The bill, named the End Polluter Welfare Act, would repeal dozens of tax policies that benefit fossil fuels, raise royalty rates on federal oil and gas production, and halt federal research into oil and gas technology. The bill's sponsors expect the bill would raise $150bn over the next 10 years.
"We have a fiscal and moral responsibility to stop forcing working families to pad the profits of an industry that is destroying our planet," Senate Banking Committee chairman Bernie Sanders (I-Vt), who caucuses with Democrats, said.
Oil and gas companies have objected to the characterization that existing tax policies for their industry qualify as subsidies. The industry argues those policies encourage investment and put them on a level playing field with other sectors, and it has opposed proposals to raise royalties on federal oil and gas production.
The Biden administration last week estimated it could raise $35bn over the next 10 years by removing longstanding federal tax policies that benefit crude, natural gas and coal production. But the Sanders bill anticipates raising four times as much revenue by expanding the universe of existing energy policies set for revisions.
The bill would raise the federal onshore oil and gas royalty rates to 18.75pc from 12.5pc, while imposing a new 13pc excise tax on the subset of existing deepwater oil and gas production that is exempt from royalties. It would also increase by 1¢/bl an existing 9¢/bl oil spill cleanup tax paid by producers, refiners and importers.
The bill would also target tax policies affecting the coal sector. It would more than double an existing excise tax on coal, to $1.38/t for underground mines and to 69¢/t for surface mines, and eliminate tax credits for advanced coal plants. It would also seek to require higher lease payments for federal coal production in the Powder River Basin.
