WAFF INVESTIGATES: Are taxpayers hurt by the BP Oil Spill settle - WAFF-TV: News, Weather and Sports for Huntsville, AL

48 First Alert Investigation

WAFF INVESTIGATES: Are taxpayers hurt by the BP Oil Spill settlement?

(Source: WAFF file) (Source: WAFF file)
(WAFF) -

BP will pay four states including Alabama more than 18 billion dollars for damages caused by the Deep Water Horizon spill back in 2010.

It sounds great, but we checked into what this settlement means to you, and we did it with the help of a taxpayer watchdog group  It turns out BP can write-off a majority of it from taxes as a business expense. That means the less they pay the more we all lose. 

And this isn’t the first time we’ve dug into this issue with the oil spill, BP’s tax deductions, and the impact on taxpayers. So what’s changed?
 
"This is a great settlement. Actually, it exceeds our expectations,” said Alabama Governor Robert Bentley.

Bentley made those comments moments after announcing a more than $18 billion settlement between BP and Alabama, Florida, Mississippi, and Louisiana. Alabama will receive around more than $2 billion for their damages from the BP oil spill. But a new report by consumer watchdog group U.S. PIRG blasts the settlement. Their reason: BP can write off around 70 percent of it as a business expense.

"For every dollar that BP will reap in tax windfall,” said U.S. PIRG’s Phineas Baxandall. “That's a dollar that taxpayers will have to pay in greater and higher tax rates, in more national debt, and in cuts to vital public programs."

We had Calhoun Community College Economist Derek Berry take a look at the PIRG report to see if it is accurate. According to Berry, if BP decides to write off a portion of the settlement, it will most certainly have an impact on you.

"The taxpayers are going to have to pick up the slack for that," said Berry.

Here's his reasoning: If B-P writes off roughly 70 percent of the settlement or $13 billion, then that's going to reduce the amount of money they pay to the federal government in taxes. Berry said if BP isn't paying that money to the federal government in taxes, then either the government can't spend as much for their services or your taxes will have to go up.

"In a sense, taxpayers are going to have potentially pay higher taxes to offset the fact that BP is paying lower taxes," said Berry.

Sound familiar? It should. Several years ago U.S. PIRG published another report showing BP potentially saved tons of money after writing off the cleanup effort as a business expense during the oil spill. We drove down to the Gulf in 2013 to question BP about the write-offs. They were more than happy to talk to us about all the work being done, but then our conversation switched gears to the report.

"I've really been focused on the cleanup efforts along the Gulf Coast and not so much the litigation and settlement discussion,” said BP spokesperson Craig Savage. “I really couldn't speak to that."

Over the last three days, we've reached out to BP by email and the phone. We want to know what they think about this latest PIRG report and if they plan to write-off any part of the settlement. They haven't responded to any of my emails or phone calls. We also tried to talk to Alabama Senator Richard Shelby. We alerted Senator Shelby to the issue during that original 2013 report.
 
"Taxpayers shouldn't have to pay,” Shelby told our camera back in 2013. “BP should have to pay any fines and damages because the taxpayers didn't do this, BP did it."
 
Senator Shelby’s office sent us a statement on this same issue on Wednesday.

“Senator Shelby’s position that taxpayers should not be forced to foot the bill for BP’s negligence remains the same today. That is why the Senator co-authored the RESTORE Act, which directs Clean Water Act fines assessed from BP to the local communities impacted instead of through the U.S. Treasury. Additionally, Senator Shelby has been a strong advocate for comprehensive tax reform.  Throughout his tenure in the United States Senate, he has introduced legislation to establish a flat tax of 17 percent on all income, which lowers individuals' rates by knocking deductions and loopholes out of the tax code.”
 
A PIRG spokesperson said a bipartisan bill is floating around Congress called The Truth in Settlements Act that would require companies to disclose in their SEC filings whether they use settlements as tax deductions. That bill would have to pass before that PIRG spokesperson says they go all out and try to stop these settlements from becoming tax write-offs.

READ MORE: U.S. PIRG Report

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