The Independent Petroleum Association of America came outstrongly against a proposal presented earlier this week byDemocratic presidential candidate Bill Bradley that would do awaywith several tax loopholes currently benefiting oil and gasproducers.

Bradley promised Tuesday that if he’s elected president he wouldshut down corporate tax shelters and loopholes resulting in anexpected revenue increase of $125 billion over 10 years. Suchspecial tax favors to big business force average Americans to paymore, he said. Bradley, a former New Jersey senator who sponsoredthe 1986 tax bill and its loophole closures, detailed his own taxplans at a luncheon with New Hampshire business leaders on Jan. 4.

“For a person who served for so long on the Senate Finance andEnergy and Natural Resources Committee, it is unfortunate that Sen.Bradley fails to understand the difficulties facing domestic oiland gas producers, the industry at large and the role that tax lawsplay in allowing companies to retain capital they need to keepproducing in the United States,” said IPAA Chairman Jerry Jordan.

The bulk of the new revenue produced by Bradley’s tax plan isexpected to come from tougher enforcement of the existing tax codethrough stepped-up audits of large corporations and increasedpenalties for illegal tax-avoidance business transactions. However,among other things his proposal would do away with about $2 billionin “subsidies” to hardrock mining companies, oil and gas producersand ranchers grazing livestock on federal land.

One provision he would repeal currently allows oil and gasproducers, as well as hard rock miners, to claim an up-front taxdeduction for intangible exploration and development drillingcosts. He also would repeal the 1990 15% tax credit for enhancedoil recovery costs. Bradley claims the two provisions costtaxpayers more than $200 million per year in lost revenue.

IPAA’s Jordan said the current tax code gives producers “theability to retain the capital they need to maintain the continueddevelopment of domestic resources. Given the realities of theinternational market place, the tax code is one effective toolproducers can use to compete with large foreign government-ownedoil companies. It also recognizes the need to maintain a strategicdomestic component to U.S. oil and gas supply.

“By eliminating tax elements in that code that were carefullycrafted over many years to assist domestic producers in maintainingand developing oil and natural gas production, Bradley’s plan wouldfurther damage the industry’s production the country needs to fuelits vibrant economy and to safeguard its security,” he added.

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