President Carter's energy tax proposals, especially his two proposed taxes affecting autos, played to a hostile audience at the House Ways and Means Committee yesterday.
As the committee opened three weeks of hearings on the President's proposals to use taxes to encourage conservation of oil and natural gas and a shift toward more abundant coal, almost every member had something critical to say about the plan.
It was criticized as hurting the poor with a big standby gasoline tax, hurting the oil companies by raising oil prices but taking it all away in taxes, hurting the Southwest by forcing expensive conversion from natural gas use to make gas available for shipment north, beign unrealistic and potentially interfering with friendly foreign trade relations.
Most of the criticism was aimed at the standby gasoline tax, which could raise the cost of gasoline 50 cents a gallon in five-cent annual increments if the nation exceeds specified annual consumption goals, and the plan to tax the sale of gas-guzzling autos and give rebates on the purchase of gas-efficient cars.
Chairman Al Ullman (D-Ore.) recalled that he was unable to persuade the House to pass a 20-cent standy gasoline tax two year ago and saw no "air of necessity" for it now."There is no constituency for a gas tax anywhere in the country," he said James R. Schlesinger, the President's energy adviser who was testifying, agreed that the energy crisis is invisible but said it is just as real as Pearl Harbour.
Ullman said after the hearing he thought Carter's proposed price-reduction tax "rebate" on purchase of high-mileage autos was "extremely marginal," that "some form" of gasoline tax would pass and that over all "we'll get a good bill."
One of the major complaints by members about the auto rebate went to the fact that foreign cars generally get better gasoline mileage than American autos. If the rebate were given to foreign cars sold her, that would put Congress in the position of taxing American gas-guzzlers to subsidize foreign imports. (A proposed tax on gas-guzzlers would be the source of the rebate money.) On the other hand, discrimination against foreign cars would violate trade agreements.
The administration is committed to doing nothing that would disadvantage the American auto industry. It will try to negotiate an agreement with its trading partners to prevent a flood imports if the rebate is enacted, Secretary of the Treasury W. Michael Blumenthal indicated a solution might be "voluntary" quotas.
Rep. William R. Cotter (D-Conn.) told Blumenthal, neither the standby gasoline tax nor the rebate has a "snowball's chance" on the House floor. He said the guzzler tax would not slow down purchases of big cars because a dealer could absorb the tax on a high-priced auto and still make more profit than on the sale of a smaller car. Why not simply forbid the sale of big gas-guzzlers? asked Cotter and several other members. That would avoid problems such as whether to give rebates to imported autos.
"I didn't think we wanted to go that far," responded Blumenthal. Big families or persons driving long distances may need big cars, he said. Forbidding sale of large autos would be like telling the rich they can't buy large houses because they use more fuel, he added.
Several members mentioned rationing as preferable to a 50-cent-a-gallon tax on gasoline. Most committee members seemed to feel that if the standby tax were approved it would almost automatically take effect because Americans would not cut down driving big cars to meet goals.
Rep. Dan Rostenkowski (D-Ill.) said: "I hear from home that if the problem is a serious as we say we should go to rationing."
The administration opposes rationing as susceptible to black market abuse and creating a hideously complicated administrativeheadache. Blumenthal said the administration has developed no rationing plan. But Schlesinger said, "We will face rationing in the 1980s unless we face up to the problem now."
Rep. Barber B. Conable (R-N.Y.), senior committee Republican, criticized the President's plan as relying too heavily on taxes that may have a stifling economic effect.
The program would take in vast amounts of tax revenue and then hand almost all of it back in rebates or tax incentives. By 1985 a proposed tax on industrial use of oil and natural gas to encourage conversion to coal would total $90.5 billion. A tax proposed to force up the price of domestic oil as a conservation measure would total $86.6 billion. The gasoline tax, if effective at the maximum rate, would generate about $163 billion in revenue by 1985. But the government estimates it would wind up with less than $1 billion if net revenue at the end of that period, because of rebates.