The U.S. House of Representatives passed a $16-billion tax bill Saturday that would extend renewable energy tax credits and encourage energy efficiency, paying for itself by axing tax breaks to oil and gas companies.
The White House said in a policy statement Friday U.S. President George W. Bush would veto the measure if approved, because it would, along with a broad energy package passed earlier by the House, "lead to less domestic oil and gas production, higher energy costs, and higher and higher taxes."
Along with the House energy legislation, the two bills form a package that will go to conference for melding with a major energy bill the Senate approved in June.
The House tax package will allow the Senate to re-visit a $32 billion tax measure that failed to be attached to their bill.
The measure passed by a 221-189 tally.
"This gives us an opportunity ... to get off our oil addiction and get into the exciting area of renewable energy sources for electricity," says Charlie Rangel, Chairman of the Ways and Means Committee, which is responsible for reporting the tax bill to the floor.
Funding the spending in the House tax bill, one measure raises $11.4 billion over 10 years by denying a manufacturing tax deduction for major integrated oil companies' domestic energy production, a subsidy which Rangel says the World Trade Organization had declared an illegal trade subsidy. Another measure raises $3.56 billion by modifying foreign income rules for certain oil and gas sales or production.
The measure extends renewable energy production tax credits to 2012, costing around $6.6 billion over 10 years, and extends a 30% tax credit for solar energy and fuel cell investment for eight years to 2016, costing around $563 million.
It establishes a new credit for plug-in hybrid vehicles of at least $4,000 per taxpayer, to a total of 60,000 vehicles a year, costing around $1.2 billion over a decade.
The bill outlines $2.3 billion for several energy efficiency measures, including bonds and deductions as incentives.
The House passage of its tax bill could rejuvenate hopes for the $32 billion Senate tax bill that Senate Majority Leader Harry Reid, D-Nev., promised to revisit after it failed in the chamber. That version would have extended production tax credits for renewable energy such as wind and solar power to 2013, offered billions of dollars in credits for clean-coal projects and carbon dioxide storage, and significantly expanded incentives for hybrid vehicles, biofuel and alternative fuel production.
Almost $30 billion of the bill would have been funded primarily by a 13% severance tax levied over 10 years on the crude and natural gas that companies sell and by the elimination of a manufacturing tax deduction for domestic energy production by major integrated oil companies.
Source: Dow Jones