Oil-and-gas industry 'wary' of tax reform

A top lobby for the oil-and-gas industry said Thursday that its members had some concerns about a push to overhaul the tax code. 

Stephen Comstock of the American Petroleum Institute told reporters that, while the industry understood the value of a streamlined tax system, the group’s members haven’t pressed too hard for a simpler code.

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“Tax reform will be a complicated process,” said Comstock, API’s manager for tax policy. “I think our members are wary of how that process will take place. But they are absolutely willing to be at the table, and engaged in how should it come about.”

Comstock also suggested that his industry might not have too much to gain from a tax revamp. 

“We may not always come out ahead,” Comstock said. “We’re not in a position of asking for anything."

“We’re really in a position now of looking at those things that are important to the industry, important to the members, and educating them on why they’re important,” Comstock added, referencing the group’s discussion with policymakers. 

The comments from API come just days after Mitt Romney, the GOP nominee for president, suggested that tax breaks used by the industry would “probably” have to be eliminated under his plan for tax reform, which calls for lowering the top corporate rate from 35 percent to 25 percent. 

Rep. Fred Upton (R-Mich.), the chairman of the House Energy and Commerce Committee, has also said in recent days that he could get on board with eliminating tax breaks for oil-and-gas if alternative energy subsidies were also scrapped.

More broadly, the oil-and-gas lobby’s stance also underscores the difficulty of tax reform — which, if successful, would almost certainly stick some taxpayers or sectors with a higher tax bill. At Thursday’s briefing, Comstock said that his group had not discussed Romney’s comments, made in last week's presidential debate, with the campaign. 

With the economy scheduled to hit the so-called “fiscal cliff” of tax increases and spending cuts at the end of the year, many on Capitol Hill are also looking at 2013 as a key year for tax reform.

But with federal deficits still elevated, the oil-and-gas industry has also faced repeated attempts from Democrats to roll back certain incentives outside of tax reform, such as expensing for drilling costs. 

Part of the industry’s defense is that it already shells out more to governments than most industries, with API saying that oil-and-gas paid an effective tax rate of almost 45 percent between 2006 and 2011. 

But Comstock acknowledged that rate combined taxes paid to federal, state and foreign governments. 

Citizens for Tax Justice, a liberal group, has released reports saying that big oil companies like ExxonMobil (14 percent) and Chevron (25 percent) paid lower rates when just considering their federal tax bill. 

API also said it was gearing up to defend its tax preferences once again during the lame-duck session of Congress. 

“For the long-term stability, and back to this pro-growth idea and how do we continue to grow the economy and create jobs, it’s certainly not with punitive taxes,” said Brian Johnson, a senior tax adviser at API.

The White House has targeted the big oil companies as it looks to reduce the deficit. 

But President Obama also released a draft plan this year that would reduce the top corporate rate to 28 percent. Sen. Charles Schumer (D-N.Y.) joined the call to decrease the corporate tax rate this week, even as he also said individual tax rates should not be slashed during tax reform. 

For their part, GOP lawmakers have also proposed lowering the top rate to 25 percent.