DROPPING OF CARBON TAX HAILED IN SOUTHWEST VA.

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, February 17, 1993                   TAG: 9302170130
SECTION: VIRGINIA                    PAGE: A10   EDITION: METRO 
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE:                                 LENGTH: Medium
DROPPING OF CARBON TAX HAILED IN SOUTHWEST VA.
President Clinton's economic message to Congress tonight will not include a call for a carbon tax and that's good news for the Southwest Virginia coal industry.
Clinton told Rep. Rick Boucher, D-Abingdon, Tuesday that he has decided against a carbon tax in favor of a tax on the BTU content of fuels instead.
Boucher was one of about 20 members of Congress who met with Clinton to discuss his economic proposals.
Clinton's decision against a carbon tax was a victory for Boucher and the coal industry because coal contains more carbon than other fuels.
It was a defeat for environmentalists who had pushed the tax as a way of discouraging the use of fuels that produce the largest amounts of carbon dioxide, a gas suspected of playing a role in global warming.
Vice President Al Gore, a supporter of the carbon tax, was by the president's side during the meeting with Boucher and the others.
Boucher; Rep. Bob Wise, D-W.Va.; and 50 other members of Congress had sent Clinton a letter, drafted by Boucher, in which they argued that a carbon tax was "essentially a tax on coal."
They argued that a carbon tax would devastate the segments of the economy that already are the most fragile and that it would fall very unevenly on consumers who get their electricity from utilities that rely on the burning of coal.
"The president assured us those arguments carried the day," Boucher said.
Clinton will recommend instead a tax on the BTU value - that is, the heat content - of fuel. BTU stands for British Thermal Unit, a measure of heat content.
It was unknown how the tax would be applied to various fuels, but the BTU tax is to be formulated so that it will not have a damaging effect on any one type of fuel, Boucher said.
Thomas Altmeyer, senior vice president for governmental affairs for the National Coal Association, said the coal industry would have prefered no energy tax at all but that the proposed carbon tax was the "worst of the worst."
Altmeyer was not sure if coal would be hurt more by a BTU tax than other fuels. Coal has a higher BTU content than other fuels and could be taxed proportionately higher than those fuels, he said.
Altmeyer said Boucher had been a leader in marshaling the forces on Capitol Hill to oppose the carbon tax by educating members of Congress and the president on the issue.
While a carbon tax would hurt the coal industry worse, a BTU tax still will discourage the use of coal and raise its price.
A BTU tax, which could raise the price of coal by as much as $5 per ton, could particularly hurt the export of coal. That, in turn, could cost Virginia mining and railroad jobs because the state sells much of its coal abroad, Altmeyer said.
If tax increases are needed, the coal industry would favor a national sales tax to an energy tax, Altmeyer said. While both taxes affect consumers, an energy tax also has an adverse impact on economic growth, he said.
Boucher said Clinton also told him Tuesday that he plans to include spending in his economic plan for improvement of rural infrastructure, primarily sewer and water systems, that would aid in economic development in rural areas.

by Archana Subramaniam by CNB