Friday, April 28, 2006

$100 Rebate on Gas Taxes: To Be Seen as Benefit or Band-Aid?

Republican tax writers have proposed a $100 rebate on gasoline taxes to be paid for eliminating LIFO inventory accounting in the oil and gas industry and by repealing a two year amortization period for domestic oil exploration (returns to previous five year period). Republicans are also attempting to extend a election to expense certain refinery costs, to exempt alternative fuel hybrid cars from the Section 280F annual depreciation limitations and to pair a proposed windfall tax with drilling for oil in the ANWR region of Alaska.

Republicans are clearly and understandably concerned with the damage that high oil prices may cause to their 2006 propects; in my opinion, the present high gasoline prices (nearly $3 per gallon) probably are more damaging to GOP chances in November than the events in Iraq. Having said that, what about the proposal: [1] I can't see taxpayers getting real excited about $100, [2] the techniques to pay for the rebate sound okay (they add to tax complexity, but tax complexity for petroleum is already extremely high). The other three ideas (alternative fuel exemption from 280F, etc.) sound okay to me, but the ANWR move might not play well in the "blue" states with environmentalists.


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