Senate Panel Demands Oil Company Tax Records

Responding to an election-year spike in gasoline prices, Senate Republicans on Wednesday drafted legislation providing $100 rebates for taxpayers, as key lawmakers sought access to Big Oil's income tax returns.

Republicans filed their bill several hours after the Senate Finance Committee announced an investigation into the taxes paid by major oil companies, which reported record profits last year.  The committee asked the Internal Revenue Service for the firms' tax returns.  Sen. Charles Grassley, R-Iowa, the committee's chairman, said the panel was concerned about high company profits and executive compensation.  "I want to make sure the oil companies aren't taking a speed pass by the tax man," he said in a statement.  "It's relevant to know what the real financial picture is for this industry," said Montana Sen. Max Baucus.

Bush earlier this week halted filling of the nation's emergency oil reserve, urged the waiver of clean air rules to ease local gas shortages and called for the repeal of $2 billion in tax breaks for profit-heavy oil companies.  He also urged lawmakers to expand tax breaks for the purchase of fuel-efficient hybrid automobiles, a politically popular measure that's also supported by environmentalists.

Democrats, too, have called for measures to ease the impact of higher prices and accused Republicans of long having done the bidding of oil companies.  Sen. Bob Menendez, D-N.J., has called for a 60-day suspension in the federal gasoline tax, a holiday that he says will cut the cost of gasoline by more than 18 cents a gallon and reduce the price of diesel fuel by more than 24 cents a gallon.  Officials said the GOP proposal envisions a rebate of $100 per taxpayer, payable by government check.  In a letter to IRS Commissioner Mark Everson, Grassley and Baucus said, "As pressure mounts to address extraordinarily high gas prices that consumers are facing at the pump, we feel we should better understand the federal tax posture of the industry."

The senators noted not only the industry profits, but "an extremely lucrative retirement plan by one oil and gas industry executive, benefits which may have been subsidized in part by the taxpayers."  The retirement compensation package given by Exxon Mobil Corp. to outgoing Chairman Lee Raymond is said to total $400 million when all pension payoffs and stock options are included.

A House-Senate conference, negotiating a large tax bill, is considering a provision that would change accounting rules for oil inventories and require the five biggest oil companies to pay $4.3 billion more in taxes.  The measure passed the Senate but was viewed as essentially dead this week because of opposition from House GOP lawmakers. The White House opposed the idea when it surfaced in November and threatened to veto the entire bill because of it.  Grassley said Wednesday that high fuel prices revived the inventory tax plan and it "is still being negotiated."

Additionally, there is broad bipartisan support for scuttling other breaks given to oil companies.  Bush on Wednesday urged Congress to remove those tax provisions, worth $2 billion over 10 years.  He said people should not pay for such subsidies when the industry is wallowing in cash.  Sen. Pete Domenici, R-N.M., chairman of the Senate Energy and Natural Resources Committee, said he cannot support tax breaks for oil companies "while some American families are searching their budgets for the extra cash they need to fill their gas tanks." Sen. John Kerry, D-Mass., said he intended to offer legislation repealing the tax breaks. They included subsidies for exploration in deep waters of the Gulf of Mexico and in geologically or politically difficult regions of the world, as well as royalty relief for certain oil and gas exploration.

Executives of the major oil companies said at a recent hearing they do not need those tax breaks. "We are not involved in trying to hold them in place," Red Cavaney, president of the American Petroleum Institute, said Wednesday at a news conference. Cavaney criticized the proposed changes on oil inventory accounting, calling them "equivalent to a windfall profits tax" for the five largest U.S. oil companies.