Chippewa.com: Doyle will propose taxing big oil

By SCOTT BAUER / Associated Press Writer

MADISON, Wis. — Gov. Jim Doyle will propose taxing big oil companies more than $270 million over the next two years to help pay for the state’s transportation needs.

Doyle said the assessment will equate to $1.50 per barrel of oil sold in the state, and the companies would be prohibited from passing the tax on to customers at the pump by raising the price of gas.

A longtime critic of big oil companies’ profits, Doyle promised aggressive enforcement of the provision, with any violation carrying a criminal penalty of up to six months in prison.

The plan is a way to get oil companies to contribute to the rising costs of the state’s infrastructure, Doyle said in an interview with The Associated Press.

“This is not the total solution but this is a significant part of it,’’ the governor said.

Another part of the solution will be an increase in vehicle registration fees, Doyle said. He wouldn’t say how much that will be, but he has previously said he would support about a $10 increase. Registering a car currently costs $55.

Assembly Speaker Mike Huebsch, R-West Salem, said he was glad Doyle recognized the need to provide funding for transportation improvements, and he is willing to work with the governor on the problem. But he said much of the shortage resulted from Doyle removing $427 million from the transportation fund two years ago to pay for education.

“There has to be an ironclad agreement that we can’t dip into the transportation fund for other purposes again,’’ Huebsch said.

Todd Berry, president of the nonpartisan Wisconsin Taxpayers Alliance, said Doyle’s administration has used $1.1 billion from the transportation fund to balance the state budget.

“These are the folks that created the transportation deficit,’’ he said, adding that it remained to be seen how the proposed assessment could be applied without costing consumers more.

Similar assessments on oil companies are in place in New Jersey, New York, Pennsylvania, and Connecticut, said Doyle spokesman Matt Canter. A similar plan was also introduced in Wisconsin by then-Gov. Tommy Thompson in the 1990s but failed to pass, Doyle said.

The time is right for it now, he said.

To ensure compliance, Doyle wants to give the state Department of Revenue the authority to audit the earnings of oil companies. If the department finds that the tax is resulting in higher fuel prices, the offending company would be subject to fines in the amount of the gains reaped by the price increase or up to six months in jail.

Doyle said he was confident the plan was legal and, given the penalties in place, he believed oil companies would not pass the charge along to customers at the pump.

Doyle, a Democrat re-elected to his second term as governor in November and a previous three-term attorney general, has been a longtime critic of large oil companies and their record profits.

The proposal will be a part of Doyle’s two-year budget he delivers to the Legislature on Tuesday. A large question mark in that budget, which covers state spending starting in July, centered on how Doyle would deal with a myriad of transportation expenses.

A special legislative committee determined in December that it will take as much as $698 million more per year to construct and maintain the state’s roads as outlined in a Department of Transportation Plan covering 2000 to 2020.

In the current two-year budget roads spending totals about $3.2 billion, Canter said. He would not say how much Doyle will propose be spent over the next two years.

A report released last week by a state agency determined that profits of the five largest oil companies exceeded profits of other major companies including those in the pharmaceutical, retail and agricultural fields.

Exxon Mobil has reported the largest annual profit in history worth $39 billion, the report by the Division of Trade and Consumer Protection at the state Department of Agriculture, Trade and Consumer Protection found. British Petroleum, Chevron, Royal Dutch Shell, ConocoPhillips, and Exxon Mobil earned a combined $113.3 billion in profits in the 2006 fiscal year, the report said.

That far exceeds profits of other major companies including Pfizer ($19.3 billion), Wal-Mart ($11 billion), and Caterpillar ($3.5 billion).

The proposed tax would either be applied when the oil companies transfer the fuel between companies or subsidiaries or when it leaves the pipeline and is sent out for distribution, Doyle’s office said.

It would not apply to sales of 100 percent biodiesel or the ethanol portion of E-85.

Doyle said oil companies would be able to deduct the assessment from federal tax liability as a cost of doing business.

An oil industry spokesman said companies will be lobbying heavily against the proposal, which he described as a veiled way to raise the gasoline tax.

“The average legislator will read through the fine lines and see what this is,’’ said Erin Roth, spokesman for the American Petroleum Institute that represents the five largest oil companies in Wisconsin. “It’s punitive to oil companies, and it’s something that we will fight and hopefully we will prevail.’’

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