Budget Update.

[gkripke@Essential.ORG]

Posting from Gawain Kripke <gkripke@Essential.ORG>

BEGIN UPDATE

 Economics for the Earth: 
 A Friends of the Earth Update
 on issues linking People, Prosperity, and the Planet

 December 5, 1995

THE TAXING DETAILS OF RECONCILIATION 

Although not a traditional focus for environmentalists, Friends of the
Earth is keeping a close eye on tax provisions of the Budget
Reconciliation bill being negotiated by Congress and the White House. We
have identified a number of provisions in the conference bill which will
benefit polluting industries and also a number of provisions that
encourage environmental clean-up and protection. Friends of the Earth is
concerned that several of these provisions unfairly favor declining,
polluting industries over growing, clean industries. This approach harms
taxpayers twice -- once by using their dollars to subsidize capital
intensive industries that harm our natural environment and twice in clean
up costs. The offending tax provisions are: 

 * exemption of commercial aviation fuels from the Transportation
 Fuels Tax -- gives preferential tax treatment to a significant
 contributor to air and water pollution by subsidizing the airline 
 industry; 

 * removing the business exclusion for energy subsidies provided by
 public utilities -- impedes programs set up by utilities to
 encourage installation of energy conservation equipment by 
 businesses; 

 * changing the coal industry retiree health equity provisions --
 exempts irresponsible coal companies from paying their fair share of 
 retired coal miner's insurance premiums; 

 * extending the tax credit for fuel production from most
 nonconventional sources -- this fuel credit does not enhance energy
 security and results in groundwater and other environmental
 contamination, with a few exceptions (coalbed methane recovery,
 landfill gas capture and clean biomass technologies). 

 * repealing or weakening the corporate Alternative Minimum Tax --
 particularly benefits industries that deplete natural resources and
 pollute the environment. On the other hand, the Budget
 Reconciliation bill does contain a few tax items that have a
 potential environmental benefit, including: 

 * extension of the Superfund excise taxes and corporate
 environmental income tax -- continues the "polluter-pay" principle
 for cleanup of toxic contaminations and requires that polluters
 bear the burden of cleanup; 

 * reinstating the Oil Spill Liability Trust Fund Excise Tax --
 ensures that polluters rather than taxpayers pay for clean-up of
 oil spills; 

 * phasing out the preferential tax treatment given to certain large
 farming corporations under the accrual accounting method --
 originally designed to help "family" farmers, this tax benefit
 often also helps large chemical-intensive agribusiness; 

 * allowing a forty percent estate tax exclusion for land dedicated
 for conservation purposes -- provides a good incentive for land
 protection near metropolitan areas, national parks, and designated 
 wilderness areas. 

Two additional items of concern are the failure of Congress to
renew the Leaking Underground Storage Tank Trust Fund tax and exempting
imported, recycled halons from the ozone depleting chemicals tax. The
failure to renew the LUST Trust Fund tax will mean that the burden of
cleaning up fuel leaking from thousands of underground storage tanks
around the country will fall on taxpayers. Friends of the Earth supports
extending this tax. 

In addition, the bill would exempt imported, recycled halons from the
ozone depleting chemicals tax. This could provide an environmental
benefit by displacing the need for production of virgin halons. However,
the exemption could allow imported virgin halons to disguise themselves as
recycled. This exemption requires strong efforts to monitor and enforce
violations abroad in order to assure that illegal importing schemes do not
arise. 

Many of these recommendations come from Friends of the Earth's 1995
report, Dirty Little Secrets which recommends eliminating $20 billion in
tax breaks, loopholes and exemptions that benefit polluting industries. 
For further details, please call Courtney Cuff at 783-7400 (ext. 207). 

HOUSE HALTS GIVE-AWAYS: SINKS INTERIOR BILL AGAIN

On November 15, the House of Representatives voted 230-199 to recommit the
Interior Appropriations Conference Report because the bill included
tremendous give-aways and anti- environmental riders. The two key issues
on this vote were a devastating legislative rider mandating mismanagement
of the Tongass National Forest in Alaska and weak legislative language on
mining reform. The vote marked the second time this year that the House
rejected the bill and sent the conference agreement back to the
House-Senate negotiating committee. 

The Interior Appropriations bill provides annual funding for the Interior
Department agencies such as the National Park Service and the Fish &
Wildlife Service as well as some other miscellaneous government agencies. 
In September, the House recommitted the bill because it did not include a
mining patent moratorium, which would prevent the Interior Department from
giving away public lands with valuable minerals for almost nothing. The
most recent version including a mining patent moratorium, but the
legislative language provided a number of loopholes which would lift the
moratorium. At stake are billions and billions of dollars worth of
valuable gold, silver, and other minerals on public lands. 

The other key issue raised during debate on the bill was a legislative
rider which would have enforced an outdated forest management plan for the
Tongass National Forest in Alaska. The rider, championed by Senator Ted
Stevens (R-AK), would have dictated levels of logging 44 percent higher
that current levels and would have subverted efforts to improve the
environmental management of the forest. The rider would have increased
the level of taxpayer subsidy provided to timber companies logging the
Tongass. From 1992 through 1994 the Tongass timber program cost taxpayers
about $100 million more than it took in revenues. 

A re-revised bill is expected to hit the House again this week or next.