House Democrat throws cold water on Rendell’s oil profits tax

Yesterday, Governor Rendell appeared before the Senate Transportation Committee and made an impassioned argument for an excess profits tax on oil companies.

By taking advantage of the Delaware Loophole, Rendell argued, energy companies like Exxon-Mobile and BP are paying only a fraction of the taxes they owe on more than 12 billion dollars worth of annual sales in Pennsylvania. He wants to exempt the companies from the corporate net income tax, and create a new levy focused specifically on them. “[The tax] would reap us somewhere between 800 and 900 million dollars a year,” he argued.  “And I don’t think there’s one citizen out there who would do anything but applaud the action of this legislature.”

The governor argues the state could keep the oil giants from passing along the tax to consumers by creating an index of two or three other states with gas prices similar to Pennsylvania’s.

But a day later, one of  Rendell’s top legislative point men in the upcoming transportation funding debate is throwing cold water on the proposal.

House Transportation Committee Chairman Joe Markosek, an Allegheny County Democrat, views the tax as a long shot, predicting a legal challenge from oil companies.

Markosek calls the tax a “populist notion,” but doubts it has enough supporters to pass the House. He declined to endorse a specific revenue plan, saying lawmakers need to figure out how much revenue they want to generate before moving onto the various proposals.

Other ideas proposed by Governor Rendell include a gas tax increase, raising vehicle and license registration fees, and leasing Pennsylvania roadways.