Tuesday, August 31, 2010

Legality of Oil Profits Tax Debated

Critics say a centerpiece of Governor Ed Rendell’s plan to generate new funding for transportation projects violates both the United States and Pennsylvania constitutions.
Rendell wants to tax oil companies’ profits, but legally prohibit the corporations from increasing prices at Pennsylvania’s gas stations in order to pay the levy.
Rolf Hanson, the executive director of Associated Petroleum Industries of Pennsylvania, opposes the tax.
He says the legislation violates the Constitution, by indirectly raising prices on consumers in other states.

"Since it could not be passed on to Pennsylvanians, it would be passed on to New Yorkers, or people from New Jersey, Maryland, Delaware, etc. So the legality of Pennsylvania enacting a tax that citizens in other states have to pay for does not pass legal muster of interstate commerce."

A 2007 legal memo solicited by the Senate Republican Caucus backs Hanson’s claim.
It also questions whether the tax would violate language in the state’s constitution which says gas tax revenue can only be used to repair transportation infrastructure, and not mass transit.
Wisconsin’s Democratic governor pushed for a similar measure in recent years, but the state legislature killed the proposal.
Rendell says other states have successfully implemented the tax, but his administration hasn’t provided any information on where those laws have gone into effect.
Rendell has said he’s confident the bill would win any legal challenge.

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