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CMS ENERGY CALLS TAX FUNDAMENTALLY FLAWED

 WASHINGTON, May 28 /PRNewswire/ -- The administration's proposed energy tax will drive up the cost of American exports, discriminate against manufacturing states and increase the tax burden of moderate and fixed income families, a senior officer of the Dearborn, Mich.-based CMS Energy Corporation (NYSE: CMS) told a national consumers conference yesterday.
 Participating in a panel discussion sponsored by the Consumer Federation of American, CMS Senior Vice President John W. Clark said the Btu tax is fundamentally flawed because it taxes the production of U.S. goods and services, driving up the cost of exports and decreasing their competitiveness in the global market.
 "Nationally," Clark said, "the Btu tax will cost consumers about $33 billion annually and place such a drag on the economy that as many as 600,000 jobs could be lost by 1998."
 "For manufacturing states like Michigan -- the nation's fourth largest exporting state -- the effect of this tax would be disastrous, adding about $2 billion per year to the cost of Michigan businesses, "Clark said. "And it would have the same impact on all the energy- intensive states which are looking for every competitive edge in the goods they manufacture for export."
 Clark added that while the initial Btu tax proposal applied to a broad range of fuels, there is no longer any resemblance of equity in how the tax is applied because the list of fuel exemptions in the plan continues to grow.
 "Other regions are being insulated from the tax, but the heavy manufacturing, energy-intensive states of the Midwest are not, and will bear the growing brunt of the energy tax as more exceptions to the tax are added," he said.
 Just as serious, Clark said, is the additional tax burden on middle and lower income families and those on fixed incomes.
 "However, you look at it, this proposal is a tax on the middle class" Clark said, "which will fall the heaviest on moderate and fixed income households that can least afford higher taxes."
 He pointed out that a family of four with a $35,000 annual income would pay about $400 more -- about 15 percent -- in federal taxes from the current level of $2,500, according to a CMS Energy estimate.
 "There are credible estimates as low as a $322 per year increase (by the Michigan Public Service Commission) and as high as a $500 increase (by The Citizens for a Sound Economy)," Clark said. "Any of them are substantial increases."
 Because of the $35,000 income level, however, these kinds of families would not qualify for federal Low-Income Home Energy Assistance (LIHEAP) or other measures proposed to offset the energy tax, Clark said.
 "This is just plain bad public policy, especially in view of the relatively paltry federal spending cuts included in this tax proposal," he said.
 Clark said the most equitable replacement for the Btu tax is a gasoline tax at the pump. This tax would fall more evenly because motorists generally have options about how much they drive and can thus, to some degree, control the amount of tax they pay.
 CMS Energy Corporation is a $3.1 billion (sales) diversified energy company with businesses engaged in the distribution of electricity and natural gas, interstate storage and transmission of natural gas, oil and gas exploration and production, independent power generation and utility services. CMS Energy Corporation's principal subsidiary is Consumers Power Company, Michigan's largest utility and the nation's fourth- largest gas and electric utility.
 -0- 5/28/93
 /CONTACT: Michael Brogan of CMS Energy Corporation, 313-436-9253/
 (CMS)


CO: CMS Energy Corporation ST: Michigan IN: UTI OIL SU:

KR-SM -- DE003 -- 3270 05/28/93 09:00 EDT
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Publication:PR Newswire
Date:May 28, 1993
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