After having begged relentlessly for the past six months for a bailout, and receiving a $13.4 last month from former President George Bush, the world's largest automaker, General Motors is now lobbying with lawmakers to waive its upcoming $7-billion tax bill.

GM is reported to be lobbying with select Congress leaders to waive its tax liability of approx $7 billion, which it will incur as a result of its restructuring by offering equity in exchange of debt and VEBA healthcare obligations for union workers.

GM wants to reduce its unsecured public debt from $27.5 billion to about $9.2 billion in exchange for equity and in a separate equity exchange, to reduce obligations to the union retiree health fund by almost 50 per cent to $10.2 billion.

The equity-for-debt exchange is part of the plan to ensure the company's long term viability, but under US corporate tax law, the debt-swap is still liable to attract tax as it is treated as income.

The automaker has been working behind the scenes, asking lawmakers to amend the $819 billion economic stimulus bill, (See: Obama visits Republicans to push relief bill) where the tax liability of $7 billion can be entirely eliminated, as it it would jeopardise its its restructuring, which it had agreed to with the US Congress in exchange for the $13.4 billion loan package. (See: Bush offers $17.4 billion to bail out GM, Chrysler)

If the waiver is not granted, then the automaker will have to return $7 billion from the $13 .4 billion bailout money it received last month, but if the government does grant the one-time waiver, it will be setting a precedent for other companies to ask for similar benefits, especially during the economic downturn.

With only two weeks left for GM to receive the last $4 billion from the $13.4 billion bailout package and show its credibility in carrying on with its restructuring by eliminating costs, limiting executive compensation and reducing debt, it will face the risk of having the entire bailout package recalled.

The automaker is lobbying hard to get either the tax liability reduced or waived off completely.

The original auto bailout plan, which was rejected by the Senate on 12 December, had provisions for solving the tax issue, but since the money was given from the $700 billion TARP fund, GM is finding itself in a tax mess although its rival Chrysler is not facing the same problem, as it is privately owned.