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Study: Oil tax felt at pump
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by Webmaster
Thursday, April 26, 2007
Democratic Gov. Jim Doyle's proposed tax on oil companies will be passed on directly to Wisconsin motorists at the pump, not to oil companies as promised, according to a study by the Wisconsin Policy Research Institute.
The study says the difficulty of enforcement, potential constitutionality issues and the economic principles behind the tax would effectively render it a 5 cent per gallon tax on consumers to fund the state's large transportation budget.
"Those listening to Gov. Doyle's budget speech heard him say, 'It will be illegal for [oil companies] to pass the fee on to consumers,'" the report said. "Economists listening to the same speech heard, 'State government will attempt to manipulate natural market forces affecting gasoline.'"
According to WPRI, major oil companies would likely push for shorter-term contracts with Wisconsin retail marketers and would reduce the volume of oil guaranteed to retailers.
"It would simply be more profitable to sell more of their product in states where the profit margin is higher," the study said. "The impact of a lower volume of gasoline being committed to Wisconsin retailers would have the effect of driving price up."
State Rep. Spencer Black, D-Madison, questioned the credibility of WPRI's report, calling the organization "an arm of the Republican Party." According to Black, the study "can't be treated as an independent academic study."
However, Black said "skepticism is warranted" regarding the tax's transfer to consumers, adding it is "incumbent on the governor to justify his statement that this will not be passed on."
Meredith Helgerson, spokesperson for the Department of Revenue, said it is always difficult to enforce a tax because "the entire tax system is based on voluntary compliance," both by individuals and corporations.
However, Helgerson said a "strong audit function" would be made possible with increased resources for the state's Department of Revenue.
However, Rep. Mark Gundrum, R-New Berlin, called the tax "unworkable" and a "terrible idea" for a recovering economy.
"It absolutely will be passed onto consumers, and that's why Republicans have been working so hard against it," Gundrum said.
He added there is no way to "prevent corporations like that from eventually passing it on down to motorists at the pump."
On the proposal's legality, Black said he would like to see a non-severability clause, voiding the entire tax if monitoring and enforcement provisions were found unconstitutional.
While he supports the tax, Black said he does not believe it is the answer to Wisconsin's transportation budget woes.
"The transportation budget does not need additional revenue … to this amount," Black said.
Instead, he said the money should instead be used for more pressing needs such as health care and education.
The report said the gross receipts tax and its no-pass-through provision is "the latest in a series of questionable fiscal maneuvers."
Anonymous (April 26, 2007 @ 5:12am):
Another thing to consider, the state forces oil companies to add various additives to gas which increase the price per gallon and decrease mileage considerably (sometimes over 10%). At the same time, they charge you the same tax rate per gallon of gas. In other words, without telling you, they have jacked up the gas tax by forcing these mileage reducing additives on the consumer.
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