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AMERICAN PETROLEUM INSTITUTE ANALYZES BTU ENERGY TAX PROPOSAL

    WASHINGTON, Feb. 22 /PRNewswire/ -- The BTU energy tax proposal before Congress will cost Americans billions of dollars more than the Clinton administration estimates, an analysis by the American Petroleum Institute shows.
    Charles J. DiBona, API president, said today, "the administration's assumptions about the tax's impact on a typical American family are grossly underestimated.
    "The administration has projected that the tax will raise $22 billion a year when it is completely phased in on July 1, 1996," DiBona said.  "But simple arithmetic demonstrates that the estimate of revenue is far too low.  Americans currently use about 6.2 billion barrels of oil annually, so a new tax of $3.47 a barrel would produce $21.5 billion in revenue just from oil -- almost equal to the administration's estimate for all fuels it would be taxing."
    Some additional calculations have to be made, DiBona said, including the tax exemption for non-fuel uses of oil and the expected increase in future energy demand.  Putting it all together, the energy tax really would collect $33 billion from users of oil, natural gas, coal and electricity, not the $22 billion the administration has said, DiBona said.
    "That translates into an impact on a typical family, in terms of direct and indirect cost increases, of not the $320 a year the administration has estimated, but something more like $475," he added.
    DiBona noted that the administration now has begun to insist that the $22 billion figure is correct because it is the net amount of revenue the government would get from the BTU tax, not the total amount of energy taxes collected.  DiBona pointed to a Treasury Department analyst's statement that the figures reflect assumptions about how the higher energy tax would affect such economic factors as jobs and incomes.
    "What that kind of argument implies," DiBona said, "is that this tax will cost our economy some 700,000 jobs, and about $35 billion in losses from the gross domestic product.  So, the revenue subtracted from the $33 billion isn't a reduction in the energy tax at all -- it comes from the loss of income and other taxes that would not be paid by people who lose their jobs and by the firms adversely affected by the tax, and through the government expenditures required to alleviate their suffering."
    DiBona said the API is opposed to the energy tax because it would do serious damage to the economic recovery, would disproportionately impact regions of the country and energy intensive industries and penalize rural and suburban consumers at the expense of urban dwellers.  "It clearly fails the administration's own tests because it is neither fair nor equitable," he said.
    API has argued for a decade of the need to restrain government spending to reduce the feded?eficit.  If after spending cuts are made and a tax is still necessary, DiBona said the fairest approach would be a European style value added tax which could be adjusted to lessen the impact on the poor by exempting food and medical care.
    -0-             02/22/93
    CONTACT:  Bill Taylor of the American Petroleum Institute, 202-682-8127 CO:  AMERICAN PETROLEUM INSTITUTE IN:  OIL SU:  EXE ECO ST:  DC


-- DC020 -- X365 02/22/93
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Date:Feb 22, 1993
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