Washington – In a sign of the political impact of soaring energy prices, the Republican-controlled Senate Finance Committee voted Tuesday to impose a $5 billion tax next year on the nation’s biggest oil companies.
The measure amounts to a one-year windfall-profits tax, a concept that most Republicans had until recently denounced as a discredited idea from the 1970s. It was added to a larger bill that would cut taxes by about $61 billion over the next five years.
Conservative Senate Republicans who support the oil industry bitterly protested the measure, but every Republican voted for the overall package, which the full Senate is expected to take up today.
The Senate bill was also a setback for President Bush because it omits one of his most cherished tax priorities: an extension of his 2001 tax cuts on stock dividends and capital gains.
Those tax cuts expire at the end of 2008, and Republican leaders badly wanted to pass at least a one-year extension this year at a cost of about $11 billion. But Republican moderates rebelled at the idea of cutting taxes for investors at the same time they were voting on spending cuts for food stamps, Medicaid and child-support enforcement programs against deadbeat dads.
Sen. Craig Thomas, R-Wyo., charged that his Republican colleagues were “undermining the energy policy that we have been working on for years” and that the $5 billion levy would discourage exploration and production.