In the tax extenders package attached to the Omnibus and pandemic relief legislation, Congress extended the excise tax on coal funding the Black Lung Disability Trust Fund, but only for one year through December 31, 2021. Unlike other provisions giving away tax goodies to special interests, the excise tax rate extension will decrease the deficit and make sure taxpayers aren’t covering the coal industry’s obligations.

The Black Lung Disability Trust Fund was established by the Black Lung Benefits Revenue Act of 1977 to fund disability payments to coal mine workers afflicted with pneumoconiosis, also known as black lung disease, and their families. The trust fund was originally financed by an excise tax of $0.50 per ton of coal sold from underground mines and $0.25 per ton of coal from surface mines, capped at 2% of the coal’s sales value. (For more in-depth analysis of the Black Lung Disability Trust Fund and coal excise tax, read our report here.)

The excise tax rate provision, unlike other tax extenders that hand out tax breaks or tax credits to special interests, maintains the tax on the coal industry so that they bear the cost of the negative human externality associated with their product, thereby reducing taxpayer liability for the disability payments. Congress has increased the coal excise tax several times because revenues from the excise tax have not been enough to cover all the claims paid by the trust fund. The excise tax was increased to $1.1 per ton on coal from underground mines and $0.55 on coal from surface mines in 1985, extended in 1987 and again in 2008. When the 2008 extension expired on January 1, 2019, Congress failed to extend the higher rate which thus returned to the original 1977 level, shifting a huge liability from the coal industry to taxpayers. A GAO report estimated that the Trust Fund outstanding debt will increase to $15 billion by 2050 due to the excise tax reduction and declining coal production.

After letting it lapse for a year, Congress extended the higher excise tax rate till December 31, 2020 through the Further Consolidated Appropriations Act of 2020 (P.L. 116-94). In the extenders section attached to the new omnibus spending bill, the excise tax was extended for one more year through the end of 2021. A one-year extension is no guarantee that taxpayers won’t be the ones on the hook for the Trust Fund’s potential $15 billion debt. The one-year extension also stands in stark contrast to extensions through 2025 for other extenders that will cost taxpayers billions instead of bringing in more revenue.

More long-term solutions, like the Black Lung Benefits Disability Trust Fund Solvency Act (H.R. 3876) introduced by Rep. Bobby Scott (D-VA) that extends the high excise tax rate to Dec 31, 2029, needs to be considered by the Congress.