The House Ways and Means Committee tentatively approved a tax on industrial use of oil and gas yesterday, but punched some holes in it first so that it may produce only two-thirds the energy savings proposed by President Carter.
The tax and rebate program to push industry and utilities from use of oil or natural gas to coal was the big oil saver in Carter's energy plan. He estimated it would save 3.3 million barrels of oil a day by 1985. His entire energy program would produce in the seven years from 1979 to 1985, from $90 billion to $44.6 billion, according to the committee's staff. Committee staff members and administration experts said they had no firm figures on energy savings the committee bill would produce, but said it might be about one-third below the administration proposal.
The administration proposed giving back the tax money through a system of credits, or tax cuts, to help industries and utilities pay for conversion to use of coal, which the country has in abundance. The committee will act on the rebate Monday and then proceed to reconsider all the tentative votes it has taken on tax parts of the Carter program during the last two weeks.
The committee watered down the tax plan by exempting some plants and lowering the rate. The first 50,000 barrels of oil (or 300 million cubic feet of natural gas) used by a plant in a year would be exempt from the tax. The committee also exempted fuels used in processing - for example, natural gas used in finishing textiles or making glass - where coal would have an adverse impact on the product. Also exempted were plants that have been ordered by federal regulation, state law or a court not to convert to coal for environmental reasons.
The committee also set up a two-tier tax system. Plants that could easily convert would pay the higher rate. Those that could not convert to coal, or only with difficulty, would be taxed at a lower rate to encourage conservation.
Under the committee bill, the tax on industrial use of oil would start in 1979 at 30 cents a barrel and climb to $3 by 1985. The tax on utilities' use of oil would not begin until 1983 and then would be a flat $1.50.
The tax on one thousand cubic feet of gas used by industry would range from 20 cents to $1.10. For utilities the gas tax would begin in 1983 at 55 cents and climb to 75 cents in 1985.
Industries exempted under the process fuel provision could be reclassified as subject to the tax only by act of Congress, not by administrative action.
In other energy actions:
The House Banking Committee approved 38 to 0 without major change a voluntary program of low-income grants and moderate-income loans subsidies to help insulate the nation's homes. The Ways and Means Committee has tentatively approved Carter's tax credit of up to $410 to help pay for insulation. A House Commerce subcommittee voted for a mandatory insulation program.
The House Commerce subcommittee headed by Rep. John D. Dingell (D-Mich.) handling most other nontax parts of Carter's energy package yesterday approved a provision requiring electric utility rate structures generally to reflect actual cost. The purpose is to stop the practice of utilities giving cheaper rates to big customers, to encourage use of energy in off-peak hours and otherwise use rate structures to reduce energy consumption. States could, however, provide for less than cost basic need rates to residences. The subcommittee will consider nontax provisions on coal conversion next week and then take its part of the overall bill to the full committee.