By Zack Colman - 03/27/13 08:49 PM EDT
The White House and congressional Democrats want to remove about $4 billion in annual tax provisions awarded to the oil-and-gas industry.
Oil-and-gas interests, and their Republican allies, say the provisions are cost-recovery mechanisms and business deductions that other industries also claim.
In 2011, nations doled out roughly $480 billion of “pre-tax” incentives, which are “when consumers pay less than supply cost of energy,” Lipton explained. They are generally found in emerging economies, according to an IMF report released Wednesday.
And “post-tax” subsidies — the sum of pre-tax and tax incentives — hit $1.9 trillion. About 40 percent of those subsidies were awarded in advanced economies, with the U.S. leading the way at $502 billion.
Lipton said artificially low energy prices encourage overconsumption of energy, in turn exacerbating climate change. Those subsidies also distort fossil fuel prices to the point of making renewable energy investments less attractive.
Stripping post-tax incentives could decrease global carbon dioxide emissions 13 percent and “generate positive spillover effects by reducing global energy demand,” the IMF report said.
While Obama and Democrats will keep gunning for the oil-and-gas industry’s tax breaks, the IMF’s call to impose a carbon tax is dead on arrival.
Majorities in both the House and the Senate oppose a carbon tax, and the White House has said it won’t pursue one.
Opponents of a carbon tax say it would slow the economy by raising energy prices.
A majority of the Senate voted against a carbon tax last week in an amendment to the nonbonding Senate Democratic budget proposal. The GOP-controlled House also would oppose such a measure.