A recent U.S. government report suggests increasing federal coal tax rates to prevent a multibillion-dollar taxpayer bailout for a black lung disability fund whose debt is projected to exceed $15 billion by 2050.
The nonpartisan Government Accountability Office, or GAO, said the borrowings of the Black Lung Disability Trust Fund will likely increase from fiscal years 2019 through 2050 due in large part to declining coal production and a scheduled 55% decrease in the coal tax rate in 2019.
The fund received about $450 million in fiscal year 2017 from a tax on coal produced and sold domestically and paid about $184 million in benefits to more than 25,000 coal miners and eligible dependents, the report said, but borrowed about $1.3 billion from the U.S. Treasury's general fund to cover its debt repayment expenditures.
GAO suggested increasing the coal tax rate by 25% to balance the trust fund by 2050. Another option is to maintain the current coal tax rates, coupled with roughly $2.4 billion of debt forgiveness.
An industry representative told the agency that "maintaining the coal tax at its current rate would continue to burden the coal industry and increasing the tax would exacerbate the burden at a time when coal production has been declining."
Ashley Burke, spokeswoman for the National Mining Association, also pushed back against the idea of a coal tax increase.
"There is no need for a tax increase on the coal industry. The only reason borrowing has been necessary is for the government to essentially repay itself for accumulated interest payments on legacy debt from the '70s and '80s," Reuters quoted her as saying.
Other options GAO suggested include decreasing current coal tax rates by 25%, coupled with about $4.8 billion in debt forgiveness, or a decrease of 55% in tax rates, plus about $7.8 billion in debt forgiveness.
Those options would increase the burden on taxpayers since the Department of the Treasury borrows from taxpayers to lend to the trust fund as needed.
Rep. Bobby Scott, D-Va., told Reuters the report should compel Congress to take action to extend or increase the coal excise tax.
"The existing black lung excise tax rate on coal companies is imperative to the long-term solvency of the trust fund," Scott was quoted as stating.
