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President to Propose $10 Per Barrel Tax on Imported Oil

Monday, February 08, 2016
Sandler, Travis & Rosenberg Trade Report

The fiscal year 2017 budget proposal that President Obama will release later this month includes a new $10 per barrel tax on both imported and domestically produced oil, a proposal that Speaker of the House Paul Ryan, R-Wis., called “dead on arrival.”

According to a White House fact sheet, the proposed fee is part of a plan to build a 21st century clean transportation system that “can help to speed goods to market, expand transportation options, and integrate new technologies like autonomous – or self-driving – vehicles while at the same time reducing our reliance on fossil fuels, cutting carbon pollution, and strengthening our resilience to the impacts of climate change.” The fact sheet stated that the long-term transportation bill passed by Congress last year “made important gains on permitting reform, innovative finance, and dedicated freight funding” but was “merely a first step toward what our economy needs, with only a modest increase in infrastructure funding.” The president’s proposal would therefore invest nearly $20 billion per year above current spending to modernize the domestic freight system and make other transportation infrastructure improvements.

To reduce the transportation system’s reliance on oil, these investments would be funded through a new $10 per barrel fee on oil that would be paid by oil companies and phased in over five years. The plan also proposes to use the one-time revenues from business tax reform to fund a temporary near-term surge in investment.

Speaker Ryan called the proposal “little more than an election-year distraction” and said it would be “dead on arrival in Congress” because it would “raise energy prices – hurting poor Americans the most.”

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