Senate Finance Committee Chairman Bob Packwood (R-Ore.) said yesterday he favors a consumption tax, preferably on energy, as part of a tax-simplification package that would lower income tax rates dramatically and retain some tax preferences without affecting the amount of revenue raised.

Packwood said he would like to see personal income tax rates even lower than the top 35 percent rate proposed by the Treasury Department.

Packwood said he also does not want to curtail such business deductions as accelerated depreciation to the extent Treasury proposed and would oppose any bill that limited the tax-free status of employe fringe benefits.

"I'd lower the top personal rate much farther than the president has, and if I had to make up the difference in revenues, I'd start with some kind of consumption tax. My preference would be energy," Packwood said at a breakfast meeting with reporters.

He did not specify how such a tax would work or how much money it should raise, although he did say a consumption tax could be an alternative to raising business taxes the $22 billion proposed by Treasury. He said Congress should be "very careful" about reducing incentives for capital formation by raising corporate taxes too much.

Rough congressional estimates show that a $1-per-barrel tax on oil would raise about $16 billion per year.