Tax & Accounting News
Unexpected Manchin Deal Set to Cost Big Oil Billions
On Thursday, July 14, Senator Joe Manchin (D-WV) and his staff dealt a "crushing blow" to Senate Majority Leader Chuck Schumer (D-NY), with the former saying he was only willing to support a reconciliation bill in August if it includes a provision to lower prescription drug prices and a two-year extension of Affordable Care Act subsidies.
In mid-July, news of Manchin's lack of support came via a Democrat who was briefed on the conversations. According to a Fox News report at the time:
Manchin was explicit that he won't support a bill before the midterms with any provisions on energy and climate or closing tax loopholes exploited by the wealthy and biggest corporations, despite his support for those specific things during months of negotiations.
Dems and the President Biden administration had been hoping to pass a sweeping tax and climate plan ahead of November's midterm elections.
Then, in a stunning reversal on Wednesday, July 27, Manchin confirmed he would take swift action and endorsed the Schumer-backed plan. This shocked both Capitol Hill and political junkies around the nation.
The West Virginia Democrat, known for his centrist leanings, has been a notable holdout on his party's domestic agenda.
Now, news has broken that the Inflation Reduction Act of 2022 will have a major impact on the Big Oil industry, to the tune of billions of dollars in import taxes.
...[the bill] proposes to reinstate a tax on crude oil and imported petroleum of 16.4 cents a gallon tax starting next January, according to a summary of the measure released by the Senate's finance committee.
The tax, called the Hazardous Substance Superfund Financing Rate, or Superfund Tax, was originally included in the House of Representatives' version of the Build Back Better Act, and it was then estimated it could generate about $25 billion in revenue.
The original Superfund tax was in effect from 1980 to 1995 at 9.7 cents per barrel, with the designation that the funds were to help clean up hazardous waste sites.
Barron's also notes, though, that there are some positives for the oil industry in Manchin and Schumer's deal, as well. For instance, it "creates tax subsidies for traditional energy plants that capture carbon emissions."
Bloomberg noted that the Superfund tax fees would be paid by "US refineries receiving crude oil and importers of petroleum products."
The outlet also reported that the Inflation Reduction Act of 2022 could see a vote on the Senate floor as early as this week.
What do you think about a reinstatement of this "Big Oil" tax?
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