New Report reveals Big Oil’s $86B offshore tax bonanzaGroups call on Senate to repeal domestic, international fossil fuel subsidies
WASHINGTON – A new report from Friends of the Earth, Oxfam America, and BailoutWatch shines a light on $86 billion worth of offshore tax loopholes benefiting Big Oil. The report provides fresh details about the history and potential cost of these subsidies, which are embedded deep in the tax code.
Fossil fuel subsidies like these are a hot topic for climate and justice groups, who see the misspent funds as low-hanging fruit that could help pay for Democrats’ proposed $3.5 trillion climate and care reconciliation package.
Recent legislation passed by the House Ways and Means Committee would eliminate two subsidies addressed in the new report: the exemption for Foreign Oil and Gas Extraction Income (FOGEI) and special treatment for dual-capacity taxpayers, worth at least $86 billion to just a handful of oil majors. Unfortunately, the legislation left intact at least another $35 billion in domestic fossil fuel subsidies that President Biden proposes ending, some of which are over a century old. Alternative proposals in the Senate like Chairman Wyden’s Clean Energy For America Act would address both domestic and international polluter giveaways.
“The House bill made a decent start by targeting Big Oil’s international tax loopholes, but it went nowhere near far enough,” said Lukas Ross, Climate and Energy Justice Program Manager at Friends of the Earth, “Leader Schumer needs to lead on climate and ensure that all $121 billion in fossil fuel subsidies are repealed in the final package.”
Repealing the Trump-era exemption for FOGEI will raise an estimated $84.8 billion in revenue. Based on an analysis of SEC filings and other data, the report finds that only 12 companies are currently eligible for the special treatment this loophole affords.
The dual capacity loophole, which allows oil companies substantial latitude to potentially misrepresent royalties and other payments to foreign governments as creditable tax payments, would raise at least another $1.4 billion; other estimates put the number much higher.
“US Big Oil companies like Exxon and Chevron have fought tooth and nail to keep the payments they make to governments around the world a secret, while paying lip service to the global movement for payment transparency,” said Daniel Mulé, Policy Lead for Extractive Industries Tax and Transparency at Oxfam. “This secrecy has a potential tax impact in the US as well, as it makes it all the more difficult to discern if US oil & gas companies are illegitimately inflating their foreign tax credits.”
The report documents the lobbying activities of firms like Chevron and Conoco specifically to protect these loopholes in particular.
“Big Oil isn’t going quietly,” said Chris Kuveke, Analyst at BailoutWatch, “Since Biden became President, it is unfortunate but not surprising that the handful of companies benefitting from these loopholes are lobbying to protect their special treatment.”
Press inquiries: Kaela Bamberger, 202-222-0703, [email protected]