Tax on big oil advances in Wis.

Tax on big oil advances in Wis.

	Published : Thu, 31 May 2007 20:23 By : Agencies Print this Story

MADISON, Wis. (AP) - An attempt to hit big oil companies in the pocketbook with a new gas tax proposed by Democratic Gov. Jim Doyle advanced Thursday, winning support from the Legislature's budget-writing committee.

The committee approved the 2.5 percent tax on oil sold in the state, with a provision prohibiting the tax from being passed along to consumers at the pump. Opponents have argued the tax is unconstitutional and will be tossed out in court.

'It's just unfortunate at this point the governor's proposing to fund our transportation system on shaky grounds,' said Erin Roth, executive director of the American Petroleum Institute, which represents the five largest oil companies in Wisconsin. 'We believe at the end of the day there will be a better way to fund transportation.'

Republicans failed in an attempt to remove the tax, arguing that everyone expects it to be passed along to drivers already struggling with gas that costs about $3.50 a gallon.

'This is going on our bill. Nobody thinks we are going to go after big oil,' said Sen. Alberta Darling, R-River Hills. 'You are going to pay it, consumers.'

Doyle pitched the gas tax as a way to get at big oil companies that reaped record profits of $100 billion last year while prices at the pump soared. On the day the budget committee took up the issue, the average price for a gallon of unleaded gasoline in Wisconsin was $3.41, according to AAA. Only Michigan, Indiana and Illinois were higher.

'I can't for the life of me figure why anyone would want to coddle big oil,' said committee co-chair Sen. Russ Decker, D-Schofield. 'They have been gouging us. We ought to go after oil companies the same way they are going after us, right in the pocketbook.'

The tax would start Oct. 1 and bring in more than $275 million over the next two years. It is a key part of Doyle's plan to pay for road construction and other transportation needs.

Another major provision, raising annual vehicle registration fees by $20 to $75, also won committee approval without debate.

Wisconsin's gas tax idea isn't unique. A similar idea was floated in Pennsylvania by Gov. Ed Rendell.

Legal experts, including former Wisconsin Attorney General Peg Lautenschlager, a Democrat, have questioned the constitutionality of imposing the tax and prohibiting oil companies from passing it along to consumers. One concern is that oil companies that can't pass the tax on in Wisconsin would tack it onto gas sold in other states.

Doing that would violate the U.S. Constitution's commerce clause, which regulates trade between states, said attorney David Crass in an analysis done for the state's largest business group, Wisconsin Manufacturers and Commerce. The WMC opposes the tax increase, while supporters include labor unions and road builders.

The plan's backers point to a 1988 U.S. Supreme Court decision that said Puerto Rico could constitutionally regulate fuel prices. However, as the nonpartisan Legislative Fiscal Bureau noted, that decision did not specifically address the provision in Puerto Rico's law barring companies from passing the tax on to drivers.

If the tax increase remains in the budget, lawsuits from oil companies are expected. Even the governor said Wednesday that he expected lawsuits, which could either delay implementation of the tax or result in the state having to pay back taxes collected if it loses.

'Before the ink is dry on the governor's signature, we will be in court,' said Sen. Luther Olsen, R-Ripon.

Roth, whose group represents the largest oil companies, said he suspects company leaders are looking into lawsuits should the measure become law.

Wisconsin's gas tax currently is fifth highest in the country, and it would become the second-highest if oil companies were able to pass along the new tax, according to the Fiscal Bureau.

The budget plan being worked on by the Joint Finance Committee must clear both the state Senate and Republican-controlled Assembly where leaders have vowed not to approve any tax increases, including the gas tax.