Wal-Mart’s $11M Profit From Oregon’s Renewable Energy Loophole Spurs Critics
Critics of Oregon’s generous renewable energy incentives are pointing to how corporate giants are profiting at the expense of taxpayers.
For instance, Wal-Mart Stores Inc. last year paid $22.6 million for the right to claim $33.6 million in tax benefits under Oregon’s Business Energy Tax Credit, reports OregonLive.
The tax credit, which has many critics in the public and politcal realms, encourages investment in alternative energy, recycling and energy conservation.
It is estimated to cost the state $168 million over the next two years, which is about $100 million more than it cost the state in the last two-year budget cycle. Such high figures have prompted state legislators to consider limiting the tax credit.
In the case of Wal-Mart, critics say that the retail giant was able to pocket $11 million, while the the state’s general fund is out the full $33.6 million in lost tax revenues.
Other major companies such as Costco and U.S. Bank have taken advantage of the tax loophole as well.
Critics say the so-called “pass through” program has made it possible for corporations and high wage-earners to avoid paying state taxes.
A lack of accountability and foresight in drawing up the program has led to other problems.
For instance, a Weyerhaeuser Paper Mill in Albany, Ore., in 2008 received $3.3 million in energy tax credits for rehabbing a biomass cogeneration plant that burned waste wood to create energy and simultaneously captured the heat to dry paper. Weyerhaeuser didn’t need the credits and sold them to Wal-Mart for $2.3 million, reports OregonLive.
Weyerhaeuser, however, sold the Albany mill to International Paper, which subsequently shut it down. Now, the renewable energy that the taxes credits paid for is no longer in service, and critics of the program are using it as an example of why the program is a failure.
During the past eight years, the state incentive has drawn $300 million in applications. The credit provides up to 50 percent of a project’s cost (up to $11 million, including cost overruns).
Oregon has the nation’s fifth-best renewable energy incentives, according to Ernst & Young.
Oregon’s rule currently allows third parties to buy renewable energy tax credits for about 67 cents on the dollar, taking the tax breaks over five years, resulting in an average annualized rate of return of about 10 percent.
Acting state Energy Department Director Mark Long instead wants the state to adopt a rate of about 3.5 percent a year. He said that mean more of the investment goes into the renewable energy project, rather than into investors’ pockets.
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