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Energy Tax Fight is Case Study of Battles Spawned by Budget Talks

July 10, 1990

WASHINGTON (AP) _ Coal lobbyist John Harman recently sat down with Treasury tax official Kenneth Gideon and tried to convince him that new energy levies would be a bad idea.

The only response Harman got was a poker face.

He didn’t really expect Gideon to take a position on energy taxes, now that President Bush has conceded that budget negotiators must find new taxes to reduce the deficit.

In fact, budget negotiators say the imposition of taxes on a broad range of fuels hasn’t yet come up during their talks, which resume today. But for Harman and other interest groups, the lobbying battle is on already.

They’ve been buttonholing administration officials and members of Congress involved in the talks, deluging them with letters, petitions, studies, newspaper articles and other tools of persuasion.

The brewing fight over energy taxes is a case study of the dozens of tax and spending issues that budget negotiators must decide. At stake are painful choices over who will pay for $50 billion in savings being sought for next year.

″We want to avoid these taxes, and it would be almost too late already if it comes out of the budget summit,″ said Monica McGuire, tax director for the National Association of Manufacturers. Her group, which has organized a coalition of industries opposed to energy taxes, has conducted a study that claims such taxes could add up to $20 billion a year to the deficit.

The National Coal Association is trying to rally opposition to new fuel taxes among coal state lawmakers on Capitol Hill. The Edison Electric Institute, representing the nation’s electric utilities, is urging Bush and the budget negotiators to reject new taxes based on fuel emissions.

Institute lobbyist Judy Boddie and her allies say higher fuel taxes would hinder U.S. competitiveness, cost jobs and worsen the deficit by slowing the economy.

On the other side of the issue, the National Wildlife Federation is urging its 78,000 members to write to Congress in support of carbon fuel taxes. It also is circulating a petition among other environmental groups, which will be given to participants in the budget talks.

″On behalf of our more than 8 million members we urge your support of carbon emission fees as an environmentally responsible way to reduce the federal budget deficit,″ a draft of the letter says.

Members of Congress also are getting in on the lobbying act. Sens. Kent Conrad, D-N.D., and Alan Simpson, R-Wyo., who represent states that would be hit hard by energy tax increases, have gotten 35 senators to sign a letter to Bush opposing new energy taxes.

″Look at the politics,″ said Conrad. ″There’s a chance to sell it as a pollution fee and dodge the tax bullet. It could come up at the last minute and develop a life of its own, and then become part of a package and be far more difficult to defeat.″

At least two types of broad energy taxes are being proposed.

One would base the tax on the amount of carbon - an air pollutant - in the fuel. It would tax coal, petroleum and natural gas but leave nuclear, hydroelectric and solar energy untouched because they contain no carbon.

Bargainers say the Bush administration and some Republican congressional leaders prefer a tax based on the amount of energy - measured in British thermal units - that a fuel contains. The so-called BTU tax would apply to all fuels and is believed to have a better chance of adoption.

Budget negotiators say the lobbying is not likely to have a dramatic effect on their work.

″The members of the budget summit have a pretty good feel for where the hot spots are,″ said House Budget Committee Chairman Leon Panetta, D-Calif., one of the bargainers. ″I’m not sure the lobbying is going to change those viewpoints.″

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