(Published Thursday, April 12, 2007 11:26:10 AM CST)
A d v e r t i s e m e n t
Most Wisconsinites might favor Gov. Jim Doyle's proposed tax on Big Oil.
After all, barrels of cash seemingly flow from the wallets of motorists into the pockets of the five major petroleum refiners-ExxonMobil, BP, Shell, ConocoPhillips and Chevron. Last year, ExxonMobil reported $40 billion in profit-the most ever by a company in any year. Prices at gas pumps seemingly go up and down arbitrarily, regardless of oil prices. So it seems fair to tap into that cash to prop up our state's transportation fund.
However, such sentiment is wrong. Doyle's tax would have many unintended consequences.
Dan Gunderson, a lobbyist for the big petroleum companies, met Tuesday with the Gazette Editorial Board and confirmed many of our suspicions and concerns.
Wisconsin would be the first state to make it illegal for oil companies to pass on to consumers this tax on gross receipts. The companies wouldn't risk breaking such a law, Gunderson says.
But Midwest refineries would see the tax as another cost of doing business. If they can ship their product to other states without incurring that expense, gas supplies in Wisconsin might tighten. Smaller retailers that don't have multiyear contracts with refineries, especially those in rural areas, might get squeezed out of business. Even those that do have contracts might struggle to renew them because refiners couldn't be certain of future costs. By the way, contrary to popular opinion, the five largest oil companies don't own any of Wisconsin's 3,300 retail gas outlets.
Even if oil companies can't pass the tax to consumers, the money must come from somewhere. Likely, the tax will hurt investors, including Wisconsinites whose 401k plans own oil stocks. Even the State Investment Board pension fund holds more than $400 million in ExxonMobil stock alone.
If it's fair to tax Big Oil to pay for highway construction, where does it stop? Will the state next add taxes to battery maker Johnson Controls, Harley-Davidson and perhaps even General Motors? What message is the state sending to companies that offer good jobs?
Finally, Gunderson suggests Doyle's proposal might violate the U.S. Constitution's commerce clause and the state constitution's uniformity clause. If the state starts spending the tax money and a court rules it must pay it back, where will it come from?
What's the solution? First, Doyle must stop robbing from the supposedly segregated transportation fund to pay other expenses. We hate to see the state constitution change, but if an amendment is needed to prohibit this practice, perhaps it is time.
Minnesota relies on various sources to fill its transportation fund. More sources might similarly serve Wisconsin well.
Absent that, there's always the gas tax. Lawmakers last year repealed automatic gas tax indexing. If transportation dollars are short, perhaps legislators need the political will power to boost the gas tax.
While unpalatable, such a tax wouldn't have the ramifications of Doyle's plan to sock Big Oil.
