$100 Gas Rebate Check Not In The Mail

GOP Drops Plan To Tax Businesses To Fund Rebate Program

(CBS/AP) 
Another Senate staffer said voters know that with gas costing more than $3 a gallon the rebate likely will pay for only a couple of tanks of gas.

"It's probably one fill-up for a Sequoia," added the aide, referring to the Toyota SUV that gets 15 miles to the gallon in city driving.

But Frist said the rebate "will help people who are emptying their wallets at the pump. ... We've got to help those who are feeling pain ... as quickly as possible." Single taxpayers earning up to $145,950 and married couples earning up to $218,950 would get the rebate in August under the Frist proposal.

The Energy Department reported Monday that the average cost of regular grade gasoline nationwide had increased to $2.92 a gallon with many parts of the country showing prices at more than $3 a gallon.

The tax accounting change involving inventories was the most substantial tax hit Congress has been seriously considering in response to the huge oil industry profits at the time of soaring costs at the pump. The change, applying only to five of the largest oil companies, had been approved by the Senate, but faced strong opposition in the House.

Oil companies waged an intense lobbying effort to block the change.

Rex Tillerson, chairman of Exxon Mobil Corp., at an energy conference Monday, called it "nothing more than a backdoor windfall profits tax" and a "very dangerous and very poorly thought out step to take." The change was estimated to increase taxes for the five major oil companies by $4.3 billion over five years.

Frist would have expanded the tax to other industries, which prompted a chorus of protests, prompting his retreat from the proposal. The National Association of Manufacturers and Wal-Mart Stores Inc., among others, made known their strong opposition to the inventory taxing change.

Senate Republicans said the rebate is an attempt to counter the Democrats' push for a suspension of the 18.4 cent a gallon gasoline tax for 60 days.

A gasoline tax "holiday" has been proposed by Sen. Bob Menendez, D-N.J., and embraced by the Democratic leadership as a short-term response to counter the sudden run-up of gas prices.

While one GOP senator, John Thune of South Dakota, introduced his own tax holiday bill, most Republicans oppose the idea.

They argue there's no assurance the tax break — which is collected from refiners — will be passed on to consumers at the pump. If the lost revenue from a tax suspension — estimated at $6 billion — is made up by imposing additional taxes on oil companies, as Democrats envision, there's incentive for companies not to pass the savings on to retailers, said critics of the plan.