House Passes Renewable Energy Tax Breaks

The House Ways and Means Committee introduced what would become the Renewable Energy and Energy Conservation Tax Act 2008 (H.R. 5351) on February 12, 2008, and the bill passed the House of Representatives on February 27, 2008. The bill proposes granting $17.5 billion in tax breaks for investments in renewable energy and building efficiency. Similar bills have been blocked in the Senate because the tax breaks would be financed through repealing other tax breaks (valued at approximately $13.6 billion) granted to oil and gas companies in 2004 for domestically produced goods.

Committee Chairman Charles Rengal referenced the economic climate in support of the funding for the bill, noting that Exxon and Chevron both reported record profits last year, and questioning whether businesses recording such profit margins and imposing record high oil prices should be subsidized by taxpayers. Missouri Congressman Roy Blunt has been the leading critic of the bill, arguing that the raised taxes on gasoline will make energy more expensive.

The current White House shares Blunt’s concerns and has issued a formal notice that President Bush will veto the bill. The Presidential veto threat stated that the proposed tax increases in the bill would “lead to higher energy costs to U.S. consumers and businesses.” The White House further rationalized its opposition to the bill on the grounds that it would disadvantage domestic companies by “reducing their ability to compete for investments in foreign energy-related projects.”