US Sen Frist Drops Accounting Change From Energy Bill
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WASHINGTON (Dow Jones)--Senate Majority Leader Bill Frist on Monday said he plans to drop a proposal for an accounting tax change that would have boosted taxes on oil companies, retailers and manufacturers.
Frist, R-Tenn., had proposed to repeal the "last-in, first-out" accounting method in an energy bill released last week. The repeal was part of an effort to pay for $100 rebate checks to help consumers offset record high gasoline prices.
Frist's proposal to scrap the "LIFO" accounting method had drawn immediate opposition from the oil industry and others since it would have resulted in a multi-billion dollar tax hike and created uncertainty about accounting policies. The change would have affected a wide variety of companies, particularly retailers and manufacturers.
First said after speaking with Senate Finance Committee Chairman Charles Grassley, R-Iowa, "we have agreed to withdraw the LIFO repeal proposal from the rebate package."
"He will hold hearings on the LIFO proposal later this year, so the pluses and minuses of the provision can become well known," Frist said in a statement.
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May 01, 2006 13:19 ET (17:19 GMT)
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US Sen Frist Drops Accounting Change From Energy Bill -2-
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Last-in, first-out accounting appeals to companies when the economy is experiencing high inflation and they face rising inventory costs. It allows goods in inventory to be sold at current prices, which reduces the taxable gain.
A LIFO repeal could adversely affect retailers and manufacturers, industries in which the accounting method can be used. A similar provision was in a Senate tax bill approved in November, but it focused just on large oil companies.
Frist said he intends to bring his energy bill to the Senate floor for a vote, but didn't specify when this would happen.
"We've got to help those who are feeling pain at the pump as quickly as possible," he said. "Families deserve relief, we must increase our domestic supply, our refinery bottleneck must end, and we must move to alternative fuels and advanced technology vehicles."
Frist spokeswoman Amy Call said the energy measure contains other offsetting revenue measures to cover cost of the rebate checks, such as restricting tax breaks for natural gas exploration costs and new revenues generated from opening the Arctic National Wildlife Refuge to drilling. Frist will be looking at other revenue raising provisions as well, Call said.
-By Rob Wells, Dow Jones Newswires; 202-862-9272; Rob.Wells@dowjones.com
(END) Dow Jones Newswires
May 01, 2006 13:46 ET (17:46 GMT)
Copyright (c) 2006 Dow Jones & Company, Inc.- - 01 46 PM EDT 05-01-06 |
