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FROM VOLUME 6, NUMBER 3, MARCH 1993

NEWS...
CLINTON PROPOSES ENERGY TAX

Item #d93mar112

U.S. President Bill Clinton proposed a broad-based energy tax as part of his economic recovery plan released in February. The rate would be based on the energy content (measured by British thermal units or Btu) of various energy sources in an attempt, according to Clinton, to even the impacts over demographic groups and industries. Coal, natural gas, nuclear power and hydroelectricity would be taxed at a rate of 25.7 cents per Btu, and oil at 59.9 cents per Btu. For instance, gasoline prices are expected to increase about 7.5 cents per gallon. Other renewable sources (wind, solar, geothermal, biomass) would be exempt. Although the generation of income is the prime motivation for the tax, the Clinton Administration estimates that the tax would reduce annual greenhouse gas emissions 25 million metric tons by the year 2000, about 1.7 percent of the 1990 level.

The proposal has implications for the other major industrial nations. The European Community has made its proposed carbon/energy tax contingent on similar moves by the U.S. and Japan, so that European industries would not be at a disadvantage. According to articles in Global Environ. Change Rep. (Feb. 26) and Energy, Econ. & Clim. Change (Feb.), the U.S. tax would encourage similar moves in both Europe and Japan, even though the tax burden might be less than half that proposed in Europe. Japan is considering a similar tax, but its Ministry of International Trade and Industry (MITI) and environmental agency are divided on the issue.

See Intl. Environ. Rptr., pp. 115-116, Feb. 24 1993; New Scientist, p. 4, Feb. 27 1993. A summary of the entire Clinton economic recovery plan, A Vision of Change for America, is available for $7.50 from Supt. Docs., U.S. Govt. Printing Off., MS-SSOP, Washington DC 20402 (202-783-3238).