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Show OIL TAXES: BAD NEWS AND GOOD NEWS By W. F. Martin Congress has created an unprecedented new excise tax on U.S. crude oil production. Since this tax will affect all Americans it's important to understand what it will do and to consider con-sider where revenues from it should go. Huge Sums It is estimated that the tax will provide government with an addi-v, addi-v, v tional $227 '. billion over .J- the next ten 7- y years. But T -If the total tax aM&i3 revenues that Martin will accrue to government from oil production pro-duction during this time will in fact be much higher. Under present tax laws and royalty agreements, nearly 60 cents of every additional dollar resulting from decontrol already goes to government and royalty holders. Under the new tax the government will get a large share of the remaining 40 cents. The tax is being designed so different tax formulas will apply to different categories of oil, with newly discovered oil and harder-to-produce oil not as heavily taxed. But the key point is that all oil production will he taxed more heavily. Furthermore, if past experience experi-ence is an indicator, the tax will bring on new complex regulations that will confuse producers, stimulate more bureaucracy to oversee producers' actions and waste more valuable time while our energy problems worsen. The Bad News The excise tax works directly against the national goal of increasing fuel supplies sup-plies at home. The $227 billion taxed away from the petroleum industry means $227 billion taken away from direct investments in finding and developing U.S. energy resources. Thus, the true effect of the tax is not to penalize oil producers but to penalize oil con- S20BIL.J Ej siobil. v liml 1969 1973 1976 Cptl Expenditure Net In coma In com Ttxti H j"j Ten Year Financial Data 18 Major Oil Companies ($ in Billions) sumers, in other words, the American public. The Good News Since the tax will be taking tak-ing investment dollars away from direct energy production, produc-tion, it is hoped that the funds will be used at least indirectly to help overcome the energy problem. Some of the money should be used to help people who face hardships because of higher energy costs. Some should be used to encourage development by private enterprise of better methods of energy production and new suppliers. A major' amount however, should be used toward balancing the federal budget so as to stabilize the dollar, reduce |