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Californians will vote on oil profits tax

It doesn't have a number yet, but some say it could trigger the nationwide reverberations of the property tax-slashing Proposition 13. The California secretary of state now has guaranteed a spot on the June ballot for an initiative through a 10 percent tax on oil company profits.

"People see the profits of the oil companies rising dramatically. They are ready to fight back," says Bill Press, chairman of the California Oil Products Coalition. He calls the initiative an attempt at "revenue sharing."

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Funds from the tax would be disbursed through the state Transportation Commission for mass transit projects -- primarily bus and rail service -- throughout California.

"If California becomes the first state to reach out and grasp some of the oil company revenues, . . . [it is] a message to the rest of the country that we want to keep the money here," says Mr. Press, a former aide to Gov. Edmund G. Brown Jr.

Oil companies will fight the measure vigorously and are already admitting that the battle will be uphill. A total of 50 oil companies, including all the majors, have hired the San Francisco-based Woodward, McDowell & Larsen Inc., a political consulting firm, to manage their campaign.

"The public is not in love with the oil companies, it won't be an easy fight, " the firm's Jack S. McDowell says.

The oil companies will argue that the measure is poorly written, that a court will have to clarify which companies would be eligible for taxation, that the tax would affect income from sources other than oil for diversified companies, and that it is simply unfair.

"It is a discriminating, punitive tax," says Atlantic Richfield Company spokesman Al Greenstein. "There is no precedent for this, singling out one industry."

If approved, the initiative would place a 10 percent tax on all oil companies that make more than $5 million in profit and operate in California. The tax would apply only to the California portion of worldwide income over $5 million, and each company would be given a 50 percent credit for new investments in production or refinery equipment in the state.

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Mr. Press estimates the tax would yield some $200 million annually.

The California Oil Profit Coalition includes the League of Women Voters, the Sierra Club, the United Automobile Workers, and the state AFL-CIO.

"The oil companies, in the recent round of price hikes, have set their profits and shown no interest in supporting the community," says Jim wood, the AFL-CIO's political director in Los Angeles.

Mr. Press has challenged the oil companies to limit their opposition campaign to $675,000, the amount he estimates can be raised to promote the idea. He is not optimistic that they will spend so little.

With the success of Proposition 13, Mr. Press says, passage of the oil tax initiative is even more likely. "Our constituency is the Howard Jarvis constituency," he says, referring to the man who developed and promoted that property-tax-slashing measure. "And I know the people," he adds, "don't think that the oil companies are paying their fair share of taxes."


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