In a five-year budget agreement that would raise fuel taxes by $57 billion, President Bush will try to keep a campaign promise by cutting oil production taxes by $4 billion.
The budget agreement, hammered out Sunday by Congress and the administration , also would raise $100 million a year by extending a ''windfall profits" tax on chemicals that damage the ozone layer.The budget agreement would more than double federal taxes on gasoline and substantially raise taxes for other transportation fuels. The oil industry has successfully fought efforts in recent years to preserve the 9.1-cent-a-gallon federal tax on gasoline, among the lowest in the developed world and less than a tenth of what is charged in most industrialized countries.
The tax would be levied to consumers at the pump, thus discouraging consumption at a time when high oil prices have renewed calls for conservation.
To assist U.S. "energy security," the budget package also would cut taxes for oil exploration and development by $400 million in 1991 and $4 billion from 1991 through 1995.
There were few details of the proposed tax cuts available Monday, but the plan is apparently modeled on a Bush campaign promise to cut taxes for industry by $600 million a year.
That plan, advanced in 1988, called for a 10 percent investment tax credit for all new oil and gas exploration up to $10 million and 5 percent for any costs beyond that.
The budget agreement worked out over the weekend also called for tax incentives for marginally profitable sources of petroleum, such as ''stripper" wells.
During the campaign, President Bush claimed that this type of tax incentive package would raise U.S. oil production by hundreds of thousands of barrels a year, increasing tax revenues and thus more than than paying for itself in two or three years.
In the new budget agreement, no claim was made that the "energy security" tax cuts would boost revenue.
The agreement also would extend a steep tax on chlorofluorocarbons and other chemicals blamed for damaging the ozone layer.
Under an international treaty, the United States is gradually banning use of these chemicals, and a tax has been collected that was meant to discourage extreme price increases as supply to the chemicals is restricted. That tax varies depending on how much ozone damage is inflicted by a particular chemical, and it more than doubled prices for the worst of the CFCs.
If the budget plan is adopted, that tax would be extended to a number of lesser-used CFCs, and to two solvents - carbon tetrachloride and methyl chloroform.