Utility Taxes

When you walk into a store, and in the process of buying something discover that it costs a bit more than the label suggests, you are most likely paying a sales tax for your goods.  This doesn’t happen in Oregon when you buy your Harry Potter book or brand new jeans at Meyer and Frank, but it still happens in some cases here.

One of those cases is utilities.  There are taxes thrown into the bill you get from PGE, or from Qwest or NW Natural Gas.  Now when you are paying taxes of this sort, like sales tax, you assume that the taxes are entirely passed on to the government.  If the sales tax is 4% of your purchase, or for the sake of argument $4 for a $100 purchase, you expect that the business will send $4 to the state.

Not so in the case of Utilities.  There is a bill in the Oregon House that has already passed the Senate that tries to stop utility companies from declaring so many deductions that they keep most of the taxes they’ve collected from consumers.

If the bill becomes law, residential customers of the state's two big private electrical utilities -- Portland General Electric and PacifiCorp -- could see reductions averaging $5 to $6 a month, according to estimates by backers of Senate Bill 408.

…
Dan Meek, a Portland lawyer and longtime utility activist, said PGE collected $92.6 million from ratepayers in 2002 while paying $790,000 in federal income taxes and the $10 minimum state corporate income tax.

On principle I am all for this bill.  For the reasons I stated above, I think it’s ridiculous that a company could keep any of the money designated at a tax that they collect from consumers.  If they want tax breaks from their own profit, apart from sales taxes and the like, and corporate taxes, more power to them.  But I assume my money is going to the state.

Utility officials questioned those dollar estimates and said the bill would unfairly penalize utilities in other lines of business not regulated by the state.   "If it were to become law, I'm sure we and other utilities would have to look at a legal challenge because the approach is patently unfair," said Kevin Lynch, PacifiCorp's vice president of government affairs.

Now, I’m normally pro-business and anti-regulation, preferring to give the market the benefit of the doubt, but in this case I’m wondering what “patently unfair” means to the utility officials.  Chalk it down to another case of shoddy journalism, either the reporter couldn’t be bothered to really figure out what the utility industry’s side REALLY was, or the editor thought that part of the story could be sacrificed in the name of saving print space.

Hey, they’ve got to fit in all those pieces about Tom Cruise and Brad Pit.

In related news, the feds are close to another Energy bill again.  Republicans say that it will promote alternative energy sources and reduce our reliance on foreign oil.  Democrats say all it is are tax breaks for greedy energy companies.   It’s probably neither, or watered down to the point that it will be entirely useless.