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The proposed Btu energy tax.

The proposed Btu energy tax would cost foundries a minimum of $65,300,000 a year, according to calculations offered by AFS' Environmental Department. This figure is based on the proposed rate for coal and natural gas of $0.257 per one million Btu's, an industry usage rate of about 254 trillion Btu's per year (a Dept. of Energy estimate), and an industry annual production rate of 11.6 million tons of castings shipped. This also assumes that all energy used by foundries is either derived from coal as coke or coal-fired electric utilities, or from natural gas or natural gas-fired electric utilities. If the energy is derived from oil, the cost will be significantly higher because the proposed tax rate on oil is $0.599 per one million Btu's. The National Assn. of Manufacturers has offered the alternative idea of substituting a value-added tax (VAT) for the Btu tax proposal as a better way to raise revenue without damaging energy-intensive industries. The administration is now working up proposals for a VAT--not to relieve NAM's concern, but to prepare for the cost of health-care proposals. (Polls indicate strong support for government-financed national health insurance.) A VAT and a Btu tax could be attempted in tandem. Regional opposition to the Btu tax is also high with legislators from the Northeast, Northwest and other energy-producing states, as well as lawmakers from heavy industrial consumer states expressing dismay over the plan. Supporters of the proposed tax include environmentalists and the Congressional Budget Office. According to a DOE spokesman, the tax would be phased in over three years beginning July 1. The point of collection would depend on the fuel type. For oil, the tax would be collected coming into the refinery or at the point of import. For natural gas, the collection point would be where it enters a pipeline; for coal it would be at the mine mouth.
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Title Annotation:Washington Alert
Author:Kiplinger, Walter M., Jr.
Publication:Modern Casting
Article Type:Column
Date:Apr 1, 1993
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