Oil company tax in budget draws criticism
Jacob McCormick
Issue date: 5/4/09 Section: Campus News
A proposed tax on oil companies that do business in Wisconsin has been the cause of some recent controversy.
Gov. Jim Doyle's 2009-11 budget has proposed taxing oil companies' profits and includes a provision that would prevent the companies from passing the tax onto consumers. The revenue would be used for transportation needs, such as roadwork. But opponents of the tax say it will be legally challenged and will hurt small businesses around the state.
According to the Wisconsin Petroleum Marketers and Convenience Store Association, the anti-pass through provision would violate the U.S. Constitution's Interstate Commerce Clause. Similar provisions have been proposed in other states, including New York, but have been found to be unconstitutional.
"In theory, (taxing big oil companies) sounds great, let's make big oil companies pay for privilege of doing business in Wisconsin," said Pam Christenson, director of public affairs for the WPMCA, "but everybody knows big oil will pass the tax onto small businesses in Wisconsin."
As an alternative revenue source, the WPMCA has lobbied for a flat 3-cent state gas tax increase. Despite promising not to raise Wisconsin's gas tax in his 2006 gubernatorial re-election bid, Doyle has not ruled out a hike as an option.
Christenson said Doyle's proposal would cause the tax on consumers to move up and down with gas prices if the provision was challenged. The 3-cent hike would be a safer and more consistent route for the state, she added. Christenson also said Doyle's proposal would cause oil companies to divert fuel to other states, which would result in supply issues and store closures.
"We know how to collect it and it won't be legally challenged," she said. "If the tax is upheld in court, companies will just choose not to send gas to Wisconsin because it will cost them more money."
Wisconsin's gas tax is one of the highest in the country at 32.9 cents a gallon, according to the state Department of Transportation. However, Sen. Kathleen Vinehout (D-Alma) said the state has relatively lower fees compared to other states.
Gov. Jim Doyle's 2009-11 budget has proposed taxing oil companies' profits and includes a provision that would prevent the companies from passing the tax onto consumers. The revenue would be used for transportation needs, such as roadwork. But opponents of the tax say it will be legally challenged and will hurt small businesses around the state.
According to the Wisconsin Petroleum Marketers and Convenience Store Association, the anti-pass through provision would violate the U.S. Constitution's Interstate Commerce Clause. Similar provisions have been proposed in other states, including New York, but have been found to be unconstitutional.
"In theory, (taxing big oil companies) sounds great, let's make big oil companies pay for privilege of doing business in Wisconsin," said Pam Christenson, director of public affairs for the WPMCA, "but everybody knows big oil will pass the tax onto small businesses in Wisconsin."
As an alternative revenue source, the WPMCA has lobbied for a flat 3-cent state gas tax increase. Despite promising not to raise Wisconsin's gas tax in his 2006 gubernatorial re-election bid, Doyle has not ruled out a hike as an option.
Christenson said Doyle's proposal would cause the tax on consumers to move up and down with gas prices if the provision was challenged. The 3-cent hike would be a safer and more consistent route for the state, she added. Christenson also said Doyle's proposal would cause oil companies to divert fuel to other states, which would result in supply issues and store closures.
"We know how to collect it and it won't be legally challenged," she said. "If the tax is upheld in court, companies will just choose not to send gas to Wisconsin because it will cost them more money."
Wisconsin's gas tax is one of the highest in the country at 32.9 cents a gallon, according to the state Department of Transportation. However, Sen. Kathleen Vinehout (D-Alma) said the state has relatively lower fees compared to other states.
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