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Last Updated: Friday, 20 October 2006, 11:19 GMT 12:19 UK
California to vote on new oil tax
No to Proposition 87 logo
The No on 87 campaign is partly funded by US oil producers
Hollywood celebrities, Silicon Valley tycoons and energy companies are waging a multi-million dollar campaign battle over plans for a Californian oil tax.

They are fighting over Proposition 87, which proposes raising $4bn (2.1bn) to fund alternative energy projects by taxing oil production in California.

Voters will be balloted on the issue at the forthcoming US mid-term elections on 7 November.

Press reports say more than $100m has been spent by the Yes and No campaigns.

The figure is 40% of what it cost to run for office in the last presidential election.

Bill Clinton and Julia Roberts

Backers of the proposition claim it will fund a $4bn programme aimed at reducing the state's petrol consumption by 25%, promoting wind, solar and bio fuel energy alternatives and reducing air pollution.

Its critics say the tax will drive up petrol prices, increase California's reliance on foreign oil and create an unaccountable bureaucracy to spend the proceeds.

The star-studded Yes on 87 camp includes former President Bill Clinton (who this week appeared in an advert for the campaign), actress Julia Roberts, tycoon Richard Branson and Google co-founder Larry Page.

Most of its campaign expenses are being funded by millionaire Hollywood producer Steve Bing, most famous in the UK for his paternity row with model Liz Hurley.

Firefighters and Arnold Schwarzenegger

The No on 87 camp is funded largely by oil companies, including Chevron and Exxon.

The No campaign is supported by California Governor Arnold Schwarzenegger (who is going for re-election), a host of newspaper editorials, the State Firefighters' Association, the California Taxpayer's Association and the California Small Business Alliance.

Bill Clinton
The Yes on Proposition 87 campaign has star-studded support

With three weeks to go, most field polls have the camps running neck and neck.

A vote either way will have ramifications far outside of the state.

A No vote will dent California's image as the most environmentally conscious US state, much of it earned by Governor Schwarzenegger, who recently pushed through a bill enforcing a 25% reduction in greenhouse gas emissions by 2020.

A Yes vote will cement California's position and send out a precedent for greater taxations on US energy giants.

Although some other states already levy fees on oil production, Proposition 87 could lead to a much more punitive range of taxes.

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