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Complaints From Oil Industry Lead GOP to Abandon Tax Plan


Carl Hulse


Senate Republicans on Monday hurriedly abandoned a broad tax proposal opposed by the oil industry and business leaders, another sign of their struggle to come up with an acceptable political and legislative answer to high gasoline prices.

Sen. Bill Frist, the majority leader, said he had decided to jettison the provision, which would have generated billions of dollars by changing the way businesses treat inventories for tax purposes. Instead, he said the Senate Finance Committee would hold hearings on the plan “later this year, so the pluses and minuses of the provision can become well-known.”

The retreat came after a torrent of objections from business leaders and their advocates, who typically view Republicans in Congress as allies. They complained that they had been blindsided by the inclusion of the proposal as a central element of the Republican leadership’s energy package late last week.

The centerpiece of the leadership proposal — a $100 rebate check to compensate taxpayers for higher gasoline prices — continued to receive a rough reception as well. Members of the public have been telephoning and writing to ridicule the idea, and even Republican lawmakers are finding fault.

“Political anxiety in an election year is to blame for a lot of the bad bills Congress passes,” said Rep. Jeff Flake, R-Ariz., who on Monday called the rebate a “knee-jerk populist idea” that voters will see through.

Democrats are trying to rally voters against Republicans, pointing to the rising fuel costs as evidence of how consumers are hurt by the opposition’s ties to the oil industry.

The Republican energy package was assembled quickly last week after lawmakers returned from a spring recess punctuated by public complaints about the rapidly rising cost of gas. Senate officials acknowledged privately that they were paying a price for rolling out the proposal before having time to fully vet it. Besides the tax provision and the rebate, the measure includes new price-gouging protections, incentives to expand domestic oil refinery capacity, support for new energy initiatives and tax incentives for buying hybrid vehicles.

Outside Congress, experts have said that the government has few realistic options that would quickly reduce gas prices.