Bush to veto bill rolling back tax breaks for oil

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WASHINGTON (AP) -- If Congress passes legislation to roll back nearly $18 billion in tax breaks for large oil companies, advisers to President Bush will recommend a veto, the White House said Tuesday.

The tax legislation is scheduled to come up for a vote in the House on Wednesday.

The revenues from oil companies would be used to pay for tax incentives for wind, solar and other renewable energy sources, including for ethanol produced from feedstock other than corn, and tax breaks for energy-efficiency programs.

A similar tax proposal passed the House last summer, but it was abandoned in the Senate where Republicans overwhelmingly opposed it. Bush said at the time he would veto the measure because it singled out an industry for new taxes.

The White House made the same argument Tuesday as it outlined its objections to the latest version of the bill.

Democrats anticipated House passage of the bill and hoped that the recent surge in oil prices to $100 a barrel and gasoline prices averaging well above $3 a gallon would help garner support for the measure, especially in the Senate, where it is expected to need 60 votes to overcome an almost certain GOP filibuster.

The House bill targets a tax break Congress provided in 2005 to help domestic manufacturers compete with foreign companies. It would limit the amount of tax credits the largest U.S. oil companies could claim under that law. The bill also limits the tax break provided to oil companies in connection with foreign oil and gas extraction.

The oil companies would have to pay an additional $17.65 billion in federal taxes over 10 years under the proposed changes, according to an analysis by the House Ways and Means Committee.

The White House, in a statement sent to Congress on Tuesday, said the bill "would use the tax code to target tax increases on a specific industry in a way that will lead to higher energy costs to consumers and businesses."

"If this legislation is presented to the president in its current form, his senior advisers would recommend that he veto the bill," said the statement.

While the oil companies have lobbied vigorously against the legislation, other energy companies, including the solar and wind energy industries, have campaigned for it on Capitol Hill.

The bill would extend production tax credits for electricity produced by wind turbines, biomass, geothermal and certain hydropower facilities. It also would extend for eight years investment tax credits for solar energy and fuel cell facilities. Those industries have argued that they need long-term assurances of tax incentives to attract investors.

The bill also would extend for two years energy efficiency tax breaks for homeowners, including a $300 consumer tax credit linked to energy efficiency improvements.