Fallen oil prices spur tax plan withdrawal

WASHINGTON — President-elect Barack Obama has shelved a proposal to slap the oil and gas companies with a new windfall profits tax because oil prices have dropped so much in recent months, the transition team confirmed today.

"President-elect Obama announced the policy during the campaign because oil prices were above $80 per barrel,” an aide said. "They are currently below that now and expected to stay below that.”

Obama’s proposal had called for using the proceeds from the tax to give American consumers an energy rebate worth up to $500 per individual or $1,000 per married couple.

Asked whether the energy rebate plan had likewise been put on hold, the aide said the rebates were included in a middle class "rescue plan” Obama released last month.

That plan calls for a permanent tax cut of $500 for a worker or $1,000 for a family, with the Internal Revenue Service using 2007 tax returns to send out the checks. Cuts also would extend to seniors.

The policy shift came to light after officials at the American Small Business League noticed that the windfall profits tax language had been removed from the team’s Web site.

Lee Fuller, vice president of government relations for the Independent Petroleum Association of America, said he applauded the change.

"Certainly, the judgment to withdraw the concept of a windfall profits tax is an important recognition that developing America’s oil and natural gas would be seriously damaged by such a tax policy,” Fuller said.