The Biden administration’s budget proposal includes a provision seeking to eliminate tax breaks for fossil fuel companies, The Hill reports.
The provision is included in Biden’s $6 trillion budget proposal after the White House previously said in its infrastructure plan that it seeks to “eliminate tax preferences for fossil fuels.”
A new Treasury Department document includes more specific details targeting tax breaks for enhanced oil recovery, which allows companies to extract fuel that is difficult to reach, and another tax break on “intangible” costs related to oil and gas drilling, including wages, repairs, and supplies.
The budget also targets a provision allowing energy firms to deduct up to 15% of the revenue they get from an oil or gas well.
Expected to raise billions:
The Biden administration estimates that eliminating these provisions will raise an additional $35 billion in revenue.
“These oil, gas, and coal tax preferences distort markets by encouraging more investment in the fossil fuel sector than would occur under a more neutral tax system,” the Treasury Department said.
The plan was cheered by environmental groups.
“This should bring us a little closer to the true cost of actually developing oil and gas and my hope is that it will decelerate the development of new fossil fuel infrastructure, which is so harmful to our planet and to communities,” Sujatha Bergen, health campaigns director at the Natural Resources Defense Council, told The Hill.
Big oil criticizes:
The energy industry criticized the proposal.
“Increased taxes on American energy will only undermine economic recovery and job creation, push natural gas and oil investments overseas and lead to less government revenue, not more,” Mike Sommers, the head of the energy industry trade group American Petroleum Institute, told The Hill.
“The main impact would be on oil and gas company profits,” the Treasury Department said. “Research suggests little impact on gasoline or energy prices for US consumers and little impact on our energy security.”