Estimated Costs to Alaskans of the Proposed 1993 BTU Energy Tax

Abstract

The BTU tax proposed by the Clinton administration in March 1993 levied an excise tax on all forms of energy at the rate of 25. 7 cents per million Btus of heat content. In addition, a surcharge of 34.2 cents per million Btus was to be added for all petroleum-based fuels. The National Association of State Energy Officials (NASEO) developed a worksheet for estimating direct and indirect Btu taxes to households. We used this methodology to estimate overall taxes that would be paid by Alaskans. We made one adjustment to the NASEO methodology by removing the direct consumption of coal by the military from the analysis. Under the adjusted NASEO methodology, the average Alaskan household would pay a total of $154 per year in direct taxes for energy consumed by the household, plus about $251 in indirect taxes, mostly in the form of higher prices for goods and services which use energy in their production. These calculations assign all of the costs of the Btu tax to United States households. Therefore, there is no additional tax burden which falls separately on "business," and in reality some of the tax burden would fall on foreigners.