MADISON, Wis. -- Wisconsin Governor Jim Doyle (D) unveiled a tax on oil companies in his budget address earlier this week; the tax bars the companies from passing it on to consumers, reported The Milwaukee Journal Sentinel. If oil companies passed the tax on to consumers, the firms could be fined for the gains from the price increase or company officials could face the jail time.
The state Department of Revenue would audit the firms, it added, but some question whether the state can legally prevent companies from passing taxes on to consumers.
The tax would mark the first cash infusion into the state's transportation account since an annual automatic increase in the gasoline tax ended in April, said the report.
Doyle said the new tax on oil companies would be a good way to have firms that have enjoyed record profits fund highways and other transportation projects. "It seems to me that these companies that have had such a big killingand this is money that has come directly out of the pockets of the people of Wisconsin and the people of the United Statesthey ought to be doing their share to help with the infrastructure needs," Doyle said.
"I think, given the severity of the penalties and the enforcement unit we'll put in place, any oil company would run a very big risk in Wisconsin if they attempted to violate that law," Doyle added.
Doyle said such a strategy was legal, but Erin Roth, the executive director of the Wisconsin Petroleum Council, questioned whether the state could prevent the companies from passing the tax on at the pump. Increased business costs invariably are paid by customers, Roth told the newspaper, calling Doyle's proposal a "gas tax in sheep's clothing."
The tax would be 2.5%or currently $1.50per barrel of oil meant for sale in Wisconsin, according to the report. The ethanol portion of blended gasoline and biodiesel would be exempt from the tax, which could further boost fuel sources Doyle has long championed.
Lawmakers can kill the proposal or tweak it before sending the budget back to Doyle for final approval, the paper said.
State Senator Russ Decker (D), co-chairman of the Joint Finance Committee, praised the idea. "The oil companies have been gouging us for too long," he said.
But Assembly Speaker Mike Huebsch (R) and State Representative Kitty Rhoades (R), who leads the budget committee with Decker, said they are skeptical that the state could stop oil companies from passing taxes on to drivers.
The new oil-company tax would bring in $114.8 million in its first year and $157.3 million in its second year.
Doyle pledged in his re-election campaign not to raise the 32.9-cent-a-gallon gasoline tax, one of the highest in the nation, the report said. In 2005, he signed a bill passed by the then-Republican-controlled Legislature that ended a 20-year-old provision giving the tax an inflationary increase every April. It went up automatically for the last time last year.
Republican legislators and transportation groups criticized Doyle in his first term for increasing borrowing for roads so he could use $1.1 billion in gasoline tax money over four years to pay for schools. Doyle said he will not use that tactic again.
Doyle has also said he wants to more than double the cigarette tax to $2.02 a pack.
Click here to view Doyle's complete budget address (gasoline portion at approximately 42:20-45:20).
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