Page 38: of Maritime Reporter Magazine (April 1993)

EDITORIAL: Is An

Energy Tax Best? (Continued from page 20)

That reduces overall oil consump- tion from what it would have been by less than two percent — not enough to noticeably improve the environment. It also means that the expected level of oil import de- pendence in the year 2000 would be 55.1 percent of oil consumption, rather than 55.9 percent.

As a result, by the end of the decade, we will still increase oil imports by about three and one- half million barrels per day. In- creasing domestic production is a far better way to reduce the growth in imports.

The VAT: A Better Tax

No one wants new taxes, but if the reality is that some kind of new taxes can't be avoided, it makes sense to impose those that are as fair and have as few harmful consequences as possible.

By almost every measure a broad- based consumption tax, such as a value added tax (VAT), is better than an energy tax:

A VAT would be imposed on a wide range of goods and services not just energy, raising large amounts of revenue at very low rates. Consider this:

A VAT would not penalize indus- tries or consumers who need to use a lot of energy.

A VAT is fairer to lower and middle income people because the tax need not apply to food, medical care and prescription drugs;

A VAT could easily be levied on imported goods and rebated on ex- ports. Thus, U.S. companies would remain on an even footing with their foreign competitors;

A VAT would not distort busi- ness decisions by inducing firms to use less efficient operating or pro- duction techniques simply to use less energy;

A VAT would not single out or penalize particular businesses or re- gions of the country, and;

A VAT would reach consumption of the underground economy.

When the Administration's eco- nomic package was presented, sup- porters warned that attacking indi- vidual part of it could jeopardize the entire plan — and that it should be passes essentially as is.

While the political considerations behind this judgment are real, the fact remains that a VAT is a better idea, which a number of U.S. Sena- tors and Representatives have al- ready endorsed.

The Administration has taken a bold step in placing its economic pack- age on the table. It should take on more and replace its energy tax with a VAT.

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