December 6, 2018 - Now is the absolute wrong time for a tax increase on the coal industry. And yet a tax increase is exactly what the industry — and the communities it supports — will face if some in Congress and the Herald-Leader’s editorial board get their way.
The tax in question is the tax imposed on the industry to support the Black Lung Disability Trust Fund. The fund was constituted in 1977 and is paid for by an excise tax on every ton of coal produced in the country. Shortly after its inception, however, the fund was saddled with tremendous debt when the government changed the eligibility criteria and more than 23,000 previously denied claims suddenly became the fund’s responsibility.
In 1986, to chip away at that debt, Congress chose to temporarily raise the excise tax. That increased rate is set to finally expire at the end of the year and the tax will revert to its previous level.
But there are some in Congress who are backing away from that agreement and want to indefinitely prolong the higher tax rate to the tune of an additional $200 million per year in taxes on the coal industry. It’s a terrible idea that will do far more harm than good.
While debt in the fund remains — a product of government retroactively changing the rules — revenue collected from the industry has long been more than enough to cover claims. Last year, for example, collections were about $429 million in coal tax revenue while just $198 million was needed for benefit payments to claimants.
Even if the tax reverts to its original level, claims will be covered. It’s the future of the coal industry that should be of concern. While the industry has stabilized under the Trump administration, it remains on life support. Tens-of-thousands of miners saw their jobs disappear over the past decade. Hundreds of coal plants have been shuttered, and others are expected to close within the next few years.
A higher tax would increase costs for utilities and U.S. steel makers and place coal at a further disadvantage against subsidized energy sources like wind and solar, leading to a loss of coal mining jobs. It would be a jolt to an industry in no shape to take more body blows. This 11th hour reversal could be the straw that breaks the camel’s back in dozens more coal communities.
Instead of saddling the industry with an unfair and unnecessary burden, Congress should be looking to level the playing field for an industry that faced eight years of relentless assault from an administration determined to punish it. Coal remains essential to the nation’s economic future. It’s still used to generate 30 percent of the nation’s electricity and in many states, including Kentucky, far more.
It is the linchpin of our reliable, affordable and resilient electricity grid.
The right way to support miners and coal communities is to focus on policies that help keep mines open and coal plants operating. Imposing a tax increase on the industry will do just the opposite.