Clinton Seeks $3.6 Bln Tax Credits to Save Energy
Washington, Jan. 26 (Bloomberg) - President Bill Clinton will ask
Congress for $3.6 billion in tax credits over five years for families and
companies that buy advanced, energy-efficient equipment and
vehicles.
The tax credits and a fiscal year 2000 request for an added $1.4
billion in federal grants are aimed at promoting development and use
of renewable energy to slow global warming, Vice President Al Gore
said in a statement.
The plan comes as the Clinton administration is seeking to overcome
Senate Republicans' opposition to a proposed climate change treaty.
While Gore said the tax-credits proposal ''will save consumers money
and create new business opportunities,'' Republicans said it faces an
uphill battle in Congress, which sidelined a similar tax-breaks measure
last year.
Under Clinton's plan, automobile companies like Ford Motor Co.,
General Motors Corp., Toyota Motor Corp. and DaimlerChrysler AG
could see higher sales if consumers took advantage of proposed tax
credits for buying fuel-efficient cars. The credits would be between
$1,000 and $4,000 a vehicle and would cost the government $900
million over five years, White House officials said.
GM worked on the proposal with the administration, said company
spokesman Pat Morrissey. GM still has problems with the specifics of
the plan, Morrissey said.
The plan's definition of vehicles that merit a credit is too vague and the
company preferred a credit of $4,000 per vehicle over a sliding scale,
Morrissey said.
''That would have been a lot more expensive,'' said Todd Stern, a
special assistant to President Clinton for climate change. ''It would
have busted our climate change budget.''
Energy-Efficient Buildings
Clinton's plan also would make available about $1.5 billion in credits
for the purchase of energy-efficient building materials, like natural gas
water heaters and heat pumps and advanced central air conditioning
systems, made by companies like United Technologies Corp. and
General Electric Co.
Another $400 million in tax credits would be available for buyers of
homes that exceed international energy-efficient standards, and $100
million would be available to encourage use of rooftop solar systems.
''People are looking for an easy way to be environmentally conscious,
and this gives them a way to do that,'' said Anne Holtz, a
representative of the National Association of Home Builders' research
center.
If passed, the plan would triple the $400 million U.S. market for solar
technology over three years, said Scott Sklar, president of Solar
Energy Industries Association. Consumers seeking the credits would
account for 60 percent of that growth, Sklar said.
In addition, Clinton wants Congress to approve $300 million to extend
a corporate tax credit that rewards companies for using electricity
generated from wind and biodegradable fuels like agricultural waste.
This credit is scheduled to expire on June 30, White House officials
said in a statement.
'Too Complicated'
An added $300 million would go to companies that between
2000-2002 use combined heat and power systems that recycle the
thermal energy that is often wasted in the generation of electricity, the
statement said.
Clinton's tax-credits plan immediately drew criticism from
congressional Republicans. Chances for passage are remote because
it would bring the Internal Revenue Service ''deeper into people's
lives,'' said Ari Fleischer, a spokesman for the tax- writing House
Ways and Means Committee. ''Who decides what's fuel- efficient? Do
you want the IRS to get a copy of the mileage statement from your
car dealer?''
''This is probably the best way to get individuals, companies and
corporations to adopt this type of technology,'' Jim Bonham, a
spokesman for Representative Robert Matsui, a California Democrat
who sponsored similar legislation last year. ''We're not telling people
they have to use it; we're providing them with incentives,'' Bonham
said.
Last year, House Ways and Means Committee Chairman Bill Archer of
Texas didn't schedule debate on Matsui's bill because ''people viewed
it as a little too complicated,'' Fleischer said.
Divisions
White House aide Stern said that ''if there's a tax vehicle this year, I
have some confidence we can get a good piece of this done.''
Republicans and Democrats are deeply divided over tax cuts, though.
Republicans are pushing for relief from estate taxes and the so-called
marriage penalty that forces some couples to pay a higher tax rate
after tying the knot. Republicans also want to use budget surpluses to
cut income taxes, while Clinton says buttressing Social Security is his
priority.
In 2000 alone, Clinton wants federal agencies to spend $1.4 billion to
develop solar, wind and thermal technology and better ways to store
and use hydrogen.
Clinton also wants the Department of Energy to work to develop more
energy-efficient kitchen appliances, computers and air conditioners,
and building insulation -- as well as more fuel- efficient diesel engines
to improve heavy trucks' average mileage to 12 miles per gallon of fuel
from an average of 5.3 miles per gallon now.
Last year, the Clinton administration got about $1 billion of the $1.2
billion in funds it wanted to promote research into energy-efficient
products.
Troubled Treaty
Gore is leading the administration's efforts to win Senate ratification of
the proposed 1997 Kyoto agreement to reduce emissions of
greenhouse gases that some scientists say increase global warming.
Many U.S. businesses oppose the treaty, saying it places too heavy a
burden on the U.S. to reduce pollution and would hurt the international
competitiveness of U.S. companies.
North Carolina Republican Jesse Helms, chairman of the Senate
Foreign Relations Committee, called the proposed treaty
''ill-conceived,'' in a November letter to Secretary of State Madeleine
Albright. Helms threatened to block its passage unless Clinton wins
changes that toughen emission standards on trade rivals like Brazil,
China, Mexico, India and South Korea.
Administration officials, led by Council of Economic Advisers
Chairman
Janet Yellen, say carrying out the Kyoto accord would cost families
only $70-$110 a year in higher fuel bills. Most of that would be offset
by the expected fall in electricity rates after the U.S. utility industry is
deregulated, she said.
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