TYPICAL ENERGY TAX $150 A YEAR, ADMINISTRATION SAYS

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

DATE: THURSDAY, February 18, 1993                   TAG: 9302180106
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-2   EDITION: METRO 
SOURCE: The Washington Post
DATELINE:                                 LENGTH: Medium
TYPICAL ENERGY TAX $150 A YEAR, ADMINISTRATION SAYS
The Clinton administration has proposed a new tax that no American will be able to escape but that few will find a serious hardship.
As described by federal officials Wednesday, Clinton's plan to tax the energy content of almost every fuel would cost the typical household $100 to $150 a year when fully in place in 1996.
Spread out over 12 months of bills for electricity, heating fuels and gasoline, and included in the price of fuel instead of billed separately, the tax would be close to invisible. Most people would not be aware they were paying it, government officials and some independent analysts said.
Other experts said the true impact on consumers may be somewhat higher because of price increases for manufactured goods, but probably not enough to create hardship. The administration has proposed additional funding for the federal low-income energy assistance program that would help offset the burden on poor families, officials said.
The president proposed to tax all fuels except wind power and solar energy according to their energy content as measured in British Thermal Units, or BTUs. The United States consumes about 90 quadrillion BTUs a year, according to the Energy Information Administration.
Phased in over three years beginning in July 1994, the proposed tax on natural gas, coal and nuclear power would be 25.7 cents per million BTUs. Hydroelectric power would be taxed according to the average BTU content of fossil fuels burned in conventional power plants to produce equivalent power.
But the tax on oil would be 59.9 cents - a strong bid by the administration, officials said, to begin recouping the so-called "hidden costs" of oil consumption - including environmental damage and the cost of keeping the nation's supply of imported oil secure. This attempt to tax what energy experts call the "externalities" of oil prices would be a sharp break with the policies of the Reagan and Bush administrations.
The Center for Coal and Energy Research at Virginia Tech had said, before Clinton's specific proposal was announced, that a tax of 12 cents on each 1 million BTUs could cost each Virginian $35.63 per year. A tax at that rate would add 1.5 cents to a gallon of gasoline, 1.1 cents per gallon of fuel oil, 1.2 cents per thermal unit of natural gas and $3 per ton of coal. Clinton's proposal was more than double the basis of the center's calculations.
By taxing BTUs instead of any particular fuel or use of fuel, the administration could sidestep many well-known political liabilities associated with other forms of energy taxation, analysts agreed.
An increase in the federal gasoline tax, for example, would have drawn opposition from high-mileage Western states. A tax on the carbon content of fuel, which some environmentalists supported, would have penalized high-carbon coal and boosted no-carbon nuclear power. But a BTU tax spreads the burden to all users of energy in whatever form.
Some energy experts had predicted that a BTU tax would be complicated to collect, but administration officials said it would not. Natural gas already is metered as it enters pipelines, and would be taxed at that point. Oil would be taxed as it reached refineries.

by Archana Subramaniam by CNB