Senate Democrats

DEMOCRATS ANNOUNCE LEGISLATION TO HELP LOWER GAS PRICES

Washington, DC — With Americans across the country struggling under the skyrocketing cost of gas, and with President Bush and his Republicans in Congress offering no help to consumers, Democrats today unveiled a new plan to ease the burden on America’s drivers with a 60 day holiday from the federal gas tax.

“For years, Democrats have been fighting to get tough on Big Oil and protect Americans from being exploited when they fuel their cars,” said Senate Democratic Leader Harry Reid. “Unfortunately, for years Republicans have been more interested in protecting oil companies’ profits than the American people’s pockets. Now that gas prices are skyrocketing and Americans are struggling just to fill their gas tanks, Congress must act to ease the burden. Passing a federal gas tax holiday and repealing the tax giveaways in the Bush energy bill is a good start.”

The Menendez Federal Gas Tax Holiday Amendment, an amendment to the Supplemental Appropriations Bill under debate in the U.S. Senate right now, will give Americans immediate relief from gas prices right at the pump by removing the $0.184 per gallon federal tax on gasoline and the $0.244 per gallon federal tax on diesel for 60 days. To recover the lost revenue, the amendment repeals huge and unnecessary subsidies for large oil companies included in the Bush energy bill and other legislation and handed out at a time when oil companies were enjoying record profits.

“Last year, the big oil companies hiked gas prices and blamed an act of God, but it’s crystal clear that the current spike in gas prices is at least partly due to an act of greed,” said Senator Menendez. “We must provide American families immediate relief by suspending the federal gas tax for 60 days and making up for the lost revenue by getting rid of some unnecessary tax giveaways to oil and gas companies.”

Today’s announcement is the latest in Democrats’ continuing efforts to protect the American people by punishing gas price gouging, ending government hand outs to oil companies raking in record profits, and ensuring Americans get the real security they deserve through energy independence. A fact sheet on the new legislation is attached.

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DEMOCRATS FIGHT TO PROVIDE IMMEDIATE RELIEF TO CONSUMERS

Offer a Federal Gas Tax Holiday

Senator Bob Menendez (D-NJ) is fighting to give immediate relief to consumers during this summer’s busy driving season by providing a Federal Gas Tax Holiday paid for by repealing over $6 billion in tax breaks and giveaways to Big Oil. His amendment gives Americans temporary and immediate relief from sky high gas prices directly at the pump. It suspends the federal gas tax for 60 days to help reduce the cost of gas and diesel for consumers. This amendment will provide $100 million dollars per day in relief directly to Americans.

A Federal Gas Tax Holiday. This amendment will provide more than $6 billion in relief directly to consumers by eliminating the federal tax for both gas and diesel for 60 days. During the period of this gas tax holiday, the cost of gas will be reduced by $0.184 per gallon and the cost of diesel by $0.244 per gallon. Drivers will receive real relief every time they go to the pump during this period.

Protects the Highway Trust Fund. Under this amendment, the Highway Trust Fund will not lose one dime. Funds generated by reducing the tax breaks and giveaways to Big Oil will be transferred to the Highway Trust Fund in an amount equal to the revenues lost through the federal tax holiday. The Highway trust fund will continue to collect the revenues needed to continue all of the projects currently planned and funded.

Big Oil Will Pay the Price. After reporting record profits of over $100 billion last year, Big Oil is the most profitable business in the world. This amendment will provide direct relief to consumers and be fully paid for by repealing three major tax breaks that Big Oil clearly does not need and eliminating unnecessary and expensive royalty relief.

Foreign Oil & Gas Foreign Tax Credit and Income. Under present law, US companies can claim a foreign tax credit for taxes paid to another country and not royalties and similar payments related to an economic benefit. The provision denies foreign tax credits for payments to a foreign country if the foreign country does not have a generally applicable income tax.

LIFO – Oil & Gas. Under current law, businesses are generally permitted to use a last-in, first-out (LIFO) method to account for their inventories. This allows companies to create a tax advantage during times of rising prices. This proposal limits the tax benefits of this LIFO method of accounting for integrated oil companies with gross receipts in excess of $1 billion.

Elimination of Amortization of Geological and Geophysical Expenditures for Large Oil & Gas Companies. Eliminates the tax break for accelerated depreciation for these expenditures for fully integrated oil companies that was passed in the Energy Bill.

Eliminates Royalty Relief and other Direct Spending. The amendment also eliminates royalty relief and other direct spending for oil and gas production incentives in Titles III and IX of the Energy Policy Act of 2005 totaling approximately $700 million. In testimony before the Senate Judiciary Committee, the major oil company CEOs testified that they did not need these incentives.

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