SEAN MURPHY Associated Press
February 7, 2014
OKLAHOMA CITY (AP) — Oklahoma’s tax on oil and natural gas production should be adjusted to provide an incentive based on the number of workers employed in the state full time, a Republican House member proposed on Thursday.
Rep. David Dank, R-Oklahoma City, has introduced a bill that would set the gross production tax rate for all oil and gas wells between 2 percent and 6 percent, depending on how many full-time workers each producer employs in Oklahoma.
“I just don’t think we should give this break to people who come in, take our wealth and leave without contributing to the overall well-being of our state,” Dank said.
The Legislature this year is expected to debate a generous tax incentive currently in place for horizontally drilled wells that reduces the gross production tax from its regular rate of 7 percent to 1 percent. Put in place in the late 1990s when horizontal drilling was costly and experimental, the incentive is now costing the state hundreds of millions of dollars each year since most new wells are drilled this way.
Because the tax incentive is scheduled to expire in 2015, the rate will return to 7 percent unless the Legislature takes action.
Lobbyists for the oil and gas industry, along with some GOP legislators, have proposed making the 1 percent rate permanent.
“Proposing a huge tax increase on oil and gas producers is no solution at all,” said Chad Warmington, president of the Oklahoma Oil & Gas Association.
But Dank said characterizing an adjustment in the tax incentive as a tax increase is “ludicrous.”
“It can’t even be couched as a tax increase,” Dank said. “These people are feasting off the deal. I think they ought to pay their fair share.”
Gov. Mary Fallin and Senate President Pro Tem Brian Bingman both have signaled a willingness to discuss adjusting the tax incentive with industry leaders, but former House Speaker T.W. Shannon endorsed the idea of making the 1 percent rate permanent.
Shannon has since resigned as speaker to focus on his race for the U.S. Senate.