Further, Under the President's Plan, when fully effective, the fuel oil consumer will pay 10 cents per gallon more (on a BTU equivalent basis) than the natural gas consumer. the consumer who heats with electricty will receive substantial cost benefits. Thus, without the rebate, the gap between fuel oil and natural gas will increase to 20 cents per gallon and the principle of equal treatment will be completely destroyed. Third, the rebate is simply not a special deal for New England. Rather, as the facts outlined above demonstrate, it is an attempt--albeit a partial one--to insure that the President's Plan does not become a special deal for everyone but fuel oil consumers. For the central fact is that, without the rebate, New England fuel consumers will be taxed so that consumers elsewhere can enjoy a larger rebate--a rebate that in many cases will exceed their increased energy costs. Further, since we in New England use only 20% of the nation's fuel oil, the vast majority of consumers who will be damaged by the lack of a rebate live outside of our region. Mechanism of Rebate The New England Fuel Institute is deeply concerned about the mechanism under which the rebate would be granted. Under the specific language of Section 1402, Title II of S. 1469, the rebate is to be given, on a quarterly basis, to the individual fuel oil dealer who must in turn pass it on to his customers. We have examined the mechanism closely and believe it is far too complex and cumbersome. Many dealers, particularly the small, independent ones, will find it impossible or far too expensive to comply with the new law. They will simply be forced to go out of business. Our detailed objections were presented to the House Ways and Means Committee on May 24. Rather than take the time of the Committee this morning, I ask that an excerpt of this testimony, setting forth those objections, be included in the record. A better mechanism can and must be developed. One alternative, as our testimony indicates, is a direct rebate to the consumer through a tax credit. However, NEFI has continued to review the rebate issue and has concluded that a simpler, more equitable mechanism would be to exempt middle distillates from the tax in the first instance, at the refiner level. The Chairman suggests this approach in his June 17 Senate Floor Statement (pages S.10105-07); as he points out, this part of the crude oil barrel is used not only to heat homes but also as "a primary energy source for mass transit" and for essential farming operations such as tractor fuel and crop drying. Α direct exemption for middle distillate fuels would be far more consistent with the basic principles of the President's Plan- which are to encourage conservation of non-essential uses of energy and to insure regional equity. The New England Fuel Institute strongly supports this approach and urges that this Committee and its Chairman give full consideration to this more simplified and equitable mechanism for providing a rebate of the crude oil equalization tax to fuel consumers and other users of middle distillate fuels. Conclusion In conclusion, Mr. Chairman, NEFI wishes again to commend you for promptly calling these hearings to focus the attention of the public, the Congress and the Executive Branch on the importance of the heating oil rebate and the serious implications of the recent rejection of this element of the National Energy Plan. As we have outlined in our statement, and you and other New England leaders have emphasized, the rebate is essential to insuring fairness and regional equity. Without the rebate, the President's Plan will impose a punitive, senseless burden on millions of fuel oil consumers and thousands of small, independent retail dealers throughout the nation. With the rebate and with a simple, effective mechanism for implementation of the rebate, the President's Plan deserves the support of our consumers and our region. Thank you very much. EXCERPT Statement of ATTACHMENT A NEW ENGLAND FUEL INSTITUTE OIL HEAT INSTITUTE OF LONG ISLAND, INC. and OIL HEAT INSTITUTE OF WESTCHESTER, INC. on Tax Aspects of the before the COMMITTEE ON WAYS AND MEANS UNITED STATES HOUSE OF REPRESENTATIVES Washington, D. C. May 24, 1977 2. The Rebate for Home Heating Oil Consumers (Section As indicated, the independent home heating dealers strongly support the objective of insuring that the increased costs attributable to the crude oil equalization tax are returned in full to the home heating oil consumer. This provision recognizes the vital interests and the current severe financial difficulties of the fuel oil consumers. However, we are opposed to the mechanism proposed in Section 1402 which gives the rebate to the retail dealer ("the ultimate vendor") who then passes on this rebate to his customer. In |