Echoing President Barack Obama’s call to close tax loopholes for the oil and gas industry, U.S. Rep. John Yarmuth, D-Ky., unveiled a bill Monday that will end federal subsidies to oil companies and return the savings to American motorists.
The Gas Rebate Act of 2012 would take the nearly $40 billion in savings from closing the loopholes and provide drivers with a direct one-time payment of approximately $160 per registered vehicle. Gas prices are up more than 17 percent this year and have increased for the last 10 consecutive days with a $3.85 per gallon average.
Yarmuth says his legislation faces an uphill battle in the Republican-controlled House, but voters should pressure lawmakers to get it through Congress.
“Clearly, unless we get voter engagement in the issue of these subsidies it will never pass. The oil companies have spent tens of millions of dollars getting their way with the American Congress. So the whole concept behind this legislation is to give the American voter a way to judge how much these subsidies are worth to them,” he says.
The legislation instructs the Internal Revenue Service and the U.S. Treasury to work with states to oversee and distribute tax rebates to drivers for each vehicle they own or have leased for more than a year. The economic impact in Kentucky would total more than $564 million, Yarmuth says.
Mr. Obama made his suggestion to end oil subsidies during his weekly radio address, but in the Republican response, U.S. Rep. Cory Gardner, R-Co., said voters are “fed up with the way the president is handling this issue” and that the Obama administration has wasted taxpayer money on alternative energy ideas. And oil industry officials and a significant number of GOP lawmakers have previously dismissed the idea, suggesting it would result in even higher gas prices.
However, Yarmuth’s office spotlights the non-partisan Joint Committee on Taxation, which concluded the subsidies are wasteful and do not lower prices at the pump.
Yarmuth says with oil companies making record profits, the federal government should continue to look at clean energy alternatives, and Congress should eliminate the subsidies and return the cash to consumers in the short-term.
“For a Louisville family with two cars that’s $320 back in your pocket. It will help cover the extra cost that you will be paying for gasoline this summer,” he says.