WASHINGTON Dec 16 A Koch Industries-funded
report warned on Friday U.S. gasoline prices would rise if
Congress passed a Republican proposal to adjust U.S. corporate
tax rates to favor exports over imports, escalating a lobbying
battle over the measure.
The report by energy consultant Philip Verleger surfaced a
week after the private conglomerate, controlled by conservative
billionaires Charles and David Koch, predicted the Republican
measure called "border adjustability" would devastate the
The actions are unusual for the Koch brothers, who spend
heavily in elections to support Republicans and conservative
policies. They are part of the early lobbying salvo by a range
of industries that hope to eliminate the measure as
President-elect Donald Trump and the Republicans in Congress
edge toward agreement on a tax reform agenda for 2017.
Analysts said the specter of higher gasoline prices could
prove embarrassing for Trump, who supports the energy sector and
has nominated prominent industry advocates to top cabinet
positions, including Exxon Mobil Corp Chief Executive
Rex Tillerson as Secretary of State.
Border adjustabililty would exempt U.S. export sales from
corporate income tax but impose it on imported goods including
crude oil used by U.S. oil refineries. The measure is included
in a larger tax reform blueprint backed by Republicans in the
House of Representatives, who say it would greatly expand
economic growth and job creation.
Verleger's report, issued by the Brattle Group consulting
firm, estimates that the price of gasoline would increase by 13
percent, or about $0.30 per gallon (3.79 litres), should border
adjustabililty become law. The price would be higher if world
oil prices rise, the report says.
Republicans have touted border-adjustability as a way to
encourage manufacturing in the United States. The measure would
also raise over $1 trillion to help pay for tax cuts in other
The House blueprint would slash the U.S. corporate tax rate
from 35 percent to 20 percent, end taxation of U.S. corporate
profits overseas and allow businesses to expense capital
House Ways and Means Committee Chairman Kevin Brady insisted
in a Friday C-SPAN interview that border adjustability would
stay in the House plan.
"Making sure that American-made products can compete here
and around the world does make a difference, and so industries
will have to adjust," he said.
His committee, which produced the blueprint, later issued a
statement saying members are listening to the concerns of oil
refiners and other importers.
(Reporting by David Morgan)