President Clinton's Btu tax has been quietly laid to rest after being manhandled by the House of Representatives, butchered by assorted lobbying groups, and stopped by the principled opposition of key Democratic Senators notably David Boren of Oklahoma. The Senate Finance Committee has voted to replace it with a modest gasoline tax, as orig- inally proposed by John Breaux of Louisiana and favored by Finance Committee Chairman Daniel Pat- rick Moynihan.

But the Btu tax is not yet completely dead; it was passed by the House and may yet come back in some form to haunt us when the House-Senate conference committee convenes. Also, a 4.3-cent per gallon gas tax won't have an impact on oil use; it certainly won't satisfy environmental activists, who want a large energy tax to reduce the emission of carbon dioxide, preferably a carbon tax that penalizes coal most heavily. Therefore, killing the Btu-carbon tax is not enough, we must drive a stake through its heart.

Let's be clear about this: Any tax increase is a bad idea. It takes money from the private sector that could have been used to start new businesses and create jobs. It inevitably distorts economic decisions about production, and thereby reduces the rate of economic growth, causing a loss to the economy and fewer jobs. But some taxes are worse than others; and the Btu tax would have been one of the worst- exceeded only by a carbon tax.

A Btu-carbon tax is inefficient. Only a fraction of the revenues collected ends up with the Treasury; the rest is spent on the administrative structure of the collection machinery, and on refunds to low-income groups. In addition, the private sector must bear substantial compliance costs unless an investment in lobbying gains an exemption from some feature of the tax. The gas tax, on the other hand, merely increases the existing federal tax and requires no new bureaucracy. Reducing the level of the Btu-carbon tax is certainly not the answer, as Sen. Phil Gramm of Texas reminds us. It keeps the same high overhead costs, and therefore makes the tax even less efficient. At a certain point, net to the Treasury fall below zero and the tax becomes a liability.

A Btu-carbon tax generally penalizes the lowest-cost fuels, distorting fuel-use decisions. Worse, the late unlamented monstrosity created by the White House imposed an arbitrary and large surtax on oil adding further distortion. A Btu-carbon tax adds to the cost of production processes and even raw materials, with the result that different industries are affected in quite different ways. It's no wonder, therefore, that exemptions were sought and granted to such intensive energy users as the aluminum industry and of course to exporters. Domestic producers, on the other hand clamor for import fees (read: a rather complicated and arbitrary set of tariffs) to protect them from imported goods, which are not subject to a Btu-carbon tax. A tax on transportation fuels does not run into such problems. It mainly affects consumers directly more like a pure consumption or sales tax. As far as international competition is concerned, most industrialized nations already have motor fuel taxes as high as $3 a gallon.

It's worth mentioning here that much of the public and a good many politicians were led to be- lieve that a Btu (British thermal units) tax, plus oil surtax, would fall mainly on the oil industry. While such a ploy may be politically astute it is quite untrue, of course. Oil companies simply pass the cost along, and the consumer gets stuck with the bill.

The consumer will never find out why prices for food, heat, transportation, and other necessities are going up. He'll blame the "greedy" oil companies, farmers, industry or electric utilities, but never the government which can keep raising the Btu-carbon tax with little fear of being found out. Mr. Gramm compares it to installing a faucet on a high-pressure water tank. Maybe that's why a Btu tax is so popular with the tax-and-spend crowd in the White House and in the Congress.

After all the exemptions that had been added in response to lobbyists for heating oil, for butane and propane, for ethanol and methanol, and for many industries, most of the Btu tax would have ended up as a tax on transportation fuels anyway. It is, therefore, more efficient, fairer and less controversial to tax motor fuels directly. So why the opposition to boosting the present federal gasoline tax? Plain politics: It is too visible and that's a strong argument in its favor: Drivers will immediately learn how much they're being taxed.

The usual objections to the gas tax are that it is regressive and regionally unfair, putting a disproportionate burden on the poor and on Western states, where driving distances are large. But independent studies by economic think tanks and the Congressional Budget Office suggest that gas taxes are not as regressive as commonly believed and certainly less so than other energy or consumption taxes. If politically required, however, low-income subsidies, similar to those in the Btu tax proposals, can be provided.

Geographic inequities can be ameliorated by refunding some part of the federal tax revenues to states with the highest per capita gas con- sumption like Wyoming, Nevada, Alaska, New Mexico and Arizona whose contribution to the national total amounts to only 4 percent. The individual states can then reduce state gasoline taxes, typically 20 cents per gallon, now paid by their citizens.

The trucking industry has raised objections to a broad-based tax on transportation fuels, arguing that transportation costs contribute to the final cost of goods and products. The commercial airlines have pleaded for relief on the basis of their poor financial condition. Farmers have argued for exemption based on the fact that they do not use highways. Producers of ethanol fuels have used the time-worn argument of energy self-sufficiency These are all problems that the Congress will have to deal with politically, keeping in mind that the bulk of revenues will come from private automobiles using gasoline, gasohol and diesel fuels.

The cleanest way to proceed is to stick with present practice, abolishing exemptions wherever possible along the way. Raising motor fuel taxes should not be a huge problem; after all, Ronald Reagan upped the federal tax from 5 cents to 14 cents per gallon without so much as a whimper from the public. Anyway motor fuel prices have been falling, in real terms, they are some 40 percent lower today than they were a decade ago. So why all the fuss?