Rep. Mike Brown took a swing at Republicans and the oil and gas industry, blaming them for the budget shortfall last year. Brown presented Oklahoma Tax Commission figures which showed that energy industry related tax breaks totaled $468,453,850 in fiscal year 2015.
“The Oklahoma Legislature has increased corporate welfare through tax exemptions, rebates and other incentives,” said Brown on Thursday. “The original justification for tax breaks two decades ago was the argument that experimental technology used for horizontal and deep wells was unpredictable and expensive. Today, however, industry sources claim 70 to 80 percent of all oil wells drilled in Oklahoma are drilled horizontally. The technology is no longer experimental and the tax breaks are no longer necessary.”
Brown also provided a Global Strategy poll showing 59 percent of Oklahomans support eliminating the drilling tax breaks to increase funding for education, highways, public safety and other state services.
“The Legislature faced a $611 million shortfall this year, and the deficit next year may be as high as $1 billion,” said Brown, a member of the House Committee on Appropriations and Budget. Taxes that the oil and gas industry avoided paying “accounted for a lot of that,” the Tahlequah Democrat said.
Oklahoma Independent Petroleum Association President Mike Terry reacted to Brown’s statement by saying now is not the time to take away the tax breaks which makes Oklahoma a competitive energy exploration state.
“The Fraser Institute has named Oklahoma the No. 1 place in the world for oil and gas investment for the past two years. Part of that ranking is due to a tax structure that encourages oil and gas exploration and production. With decreased commodity prices limiting the number of active drilling rigs working in the United States, it is imperative Oklahoma remains competitive for investment dollars. Tax provisions that encourage drilling do that and help Oklahoma cement its position as a top-tier energy state,” said Terry.
The OIPA leader also noted that while the tax breaks are helping the companies, the overall energy industry handles much of the tax burden to pay for infrastructure, education and health care.
“The gross production tax, personal and corporate income taxes and sales taxes paid by the oil and natural gas industry account for approximately 25 percent of all taxes paid in the state. That number increases when you include motor vehicle taxes, income tax on royalty payments, ad valorem taxes and the litany of other miscellaneous taxes and fees paid by oil and natural gas producers and the service companies that support them,” Terry added.
