In an effort to clean up the massive BP oil spill, Congress is set to vote on a tax increase to finance the imitative. The new bill would quadruple a tax on oil to 32 cents a barrel, raising approximately $11 billion over the next decade. This tax would be levied on oil produced in the U.S. or imported from foreign countries.
Under terms of the bill, the revenue would go to a fund managed by the Coast Guard to help pay to clean up spills in waterways, including the Gulf of Mexico. There has been little public opposition to the oil tax from the petroleum industry, but the overall bill would increase the federal budget deficit by approximately $134 billion, drawing opposition from Republicans and some Democrats.
President Barack Obama and congressional leaders have said that they expect BP to foot the bill for the cleanup. BP executives stated before Congress last week that they would pay “all legitimate claims” for damages. However, BP stated earlier this week that its costs for responding to the spill had grown to about $760 million.
Since a federal law caps liability at $75 million for economic damages beyond direct cleanup costs, Democratic senators worked to pass a bill last week that would have increased the cap to $10 billion, but they were blocked by Republicans. In response to the defeat, the oil industry stated that such a high cap would make it difficult, if not impossible, to insure oil rigs.