Fuels

Wis. Mulls Tax on Oil Companies

Proposal would also bar them from passing tax onto consumers
MADISON, Wis. -- Wisconsin would tax large oil companies operating in the state and bar them from passing the tax on to consumers at the pump under a proposal added to the state budget by a committee late Thursday night, said the Associated Press.

No other state taxes oil companies and bars them from passing the tax along at the pump, according to Wisconsin's nonpartisan Legislative Fiscal Bureau.

State Representative Mark Pocan (D) accused Republicans who oppose the tax of sticking up for the oil companies that posted record profits in recent years. But even he admitted [image-nocss] having questions about the legality of the tax.

"This will be an expensive court case," said State Senator Luther Olsen (R). "We're not defending Big Oil. If we could tax them and it would work, I'd be for it."

In 1983, the New York Supreme Court declared that a state law prohibiting oil companies from passing along a similar tax violated the Commerce Clause of the U.S. Constitution. The Fiscal Bureau said the proposal approved by the budget committee raises the same legal issue.

"It is likely the oil industry will litigate swiftly in the hope that successful litigation would put an end to any efforts by other states to enact similar provisions," the bureau said in a memo for lawmakers.

The bureau also said monitoring compliance would be impractical.

Democrats on the budget-writing Joint Finance Committee were notunited on the new tax. Governor Jim Doyle (D) has pushed the idea since 2007 but had trouble overcoming opposition from those who question its constitutionality.

The tax is a percentage based on revenues of the oil companies, not their profits as Doyle has repeatedly characterized it. Because fuel may be bought and sold several times before it gets to the pump, tracking the costs of each buyer and seller would be difficult, the Fiscal Bureau said.

Gas station and convenience store owners have been among the most vocal critics of the plan.
Democrats were divided on the tax. Two of them, State Reps. Jennifer Shilling and Gary Sherman, joined the committee's four Republicans in voting to remove the item; 10 Democrats supported it.

The proposal must pass the Democratic-controlled state legislature and be approved by Doyle before it becomes law.

Theapproximately $260 million raised from the tax over the next two years would be used to pay for road construction and help deal with a projected $6.6 billion state budget shortfall.

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