We had some fun two weeks ago asking the question, Does Sen. Manchin really think coal doesn’t get ‘a penny of subsidies’?
Well, now it seems that President Obama is interested in making it so. As my buddy Peter Gartrell reported for Platts:
The coal industry stands to lose nearly $2.6 billion in federal tax incentives over the next decade as part of the Obama administration’s proposed fiscal 2012 budget released Monday.
The administration’s proposal is identical to coal incentives cut in its budget last year. The White House is aiming to meet a G-20 climate change agreement from 2009 in which member countries pledged to phase out fossil fuel subsidies.
Repealing the tax provisions would “foster the development of a clean-energy economy and reduce our dependence on fossil fuels that contribute to climate change,” the administration said in its budget message. The tax incentives equal less than 1% of the coal industry’s revenue over the next 10 years, according to White House projections.
A complete rundown of the subsidies in question is available here, (See page 18) but here’s the short version from Peter’s story:
Under the budget proposal, coal companies would no longer be able to expense exploration and development costs; use percentage depletion for hard mineral fossil fuels; or claim domestic manufacturing deductions against coal production income. Royalties from privately owned coal blocks would be treated as regular income rather than capital gains for tax purposes, translating to a higher tax rate.
Peter also reports that:
The mining industry was preparing to fight any elimination of tax benefits, no matter how small, as well as proposed cuts to coal-related research programs found elsewhere in the Obama budget.
“We just don’t think that raising taxes in this economic environment makes sense, it’s a disincentive,” Luke Popovich, a National Mining Association spokesman, said, calling the budget a “missed opportunity.”
The last time the Obama administration proposed these cuts, in 2010, Sen. Jay Rockefeller, D-W.Va., opposed them — falsely suggesting that the proposals were aimed at hurting the development of carbon capture and sequestration technology.
This time, Sen. Rockefeller had this to say about the cost-cutting measures included in President Obama’s budget:
.. We must not go down the dangerous path of reducing our national deficit on the backs of hard working American families. Shared sacrifice also has to include those at the top – by requiring wealthy individuals and multi-national corporations to pay their fair share.
Does that include multi-national coal corporations? We’ll have to wait and see.
As for my good friend Sen. Manchin, he issued his own statement about the Obama budget, saying:
We must not let the budget debate be driven by party interests for the next election. It must be driven to serve the next generation and beyond. What we have is a budget proposal from the President designed to get our attention, but given our fiscal challenges, it does not go far enough. This is not what the country needs or expects.
Stay tuned …