Top US Republican rejects higher taxes on oil firms

WASHINGTON Sun May 15, 2011 4:18pm EDT

WASHINGTON May 15 (Reuters) - The top U.S. Senate Republican on Sunday rejected a proposal to scale back tax breaks for big oil firms, calling it a political maneuver.

Senate Republican Leader Mitch McConnell said the Democratic plan to repeal major tax incentives would "raise the price of gas at the pump, send jobs overseas" and make the United States even more dependent on oil imported from other countries, such as Venezuela.

"That's just a political stunt," McConnell said on CNN's "State of the Union" program.

Democrats have crafted a bill to scrap certain tax deductions used by the five biggest oil companies, and potentially free up $21 billion over a decade to help ease the budget deficit.

Eliminating the tax breaks has been a goal of President Barack Obama and the call by Democratic lawmakers has become louder as gasoline prices have hovered near $4 a gallon.

Republicans, who control the House of Representatives, have opposed curbing the tax breaks and some Senate Democrats are wary of the idea, leading analysts to predict its chances of passing are slim.

But high energy costs are proving a potent political issue as the 2012 presidential campaign heats up and Democrats want to try to put Republicans on record as supporting Big Oil. Pushing for a vote on the legislation on tax breaks is one way to do that.

Republicans for their part are hammering Obama over high gasoline prices, which threaten to slow the economy just as it is beginning to pick up steam.

Under pressure over energy costs, Obama announced on Saturday the expansion of domestic oil production in Alaska and the Gulf of Mexico. (Reporting by Lucia Mutikani; Editing by Peter Cooney)

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