chapter  4
12 Pages

The Btu Tax Experience: What Happened and Why it Happened

WithDawn Erlandson

President Bill Clinton, in his State of the Union Address on February 17, 1993, proposed a "broad-based energy tax as the best way to provide revenue to lower the deficit". Because the tax combats pollution, promotes energy efficiency, and promotes the independence economically of the country, as well as helping to reduce the debt. The mere proposal of the Btu tax by the President was a victory for advocates of pollution taxes. The hybrid Btu tax was brilliantly conceived in every way. It encouraged cleaner forms of energy, and thus would cut pollution without being a carbon tax. While broad political debate was generally in favor of the Btu tax, nearly every industry began to calculate the impact of the proposed tax. Led by Representative Dan Rostenkowski, the Democrats unanimously passed the President's budget plan intact, with the Btu tax included. As passed, the plan remained relatively unchanged from the Treasury's latest version.