At his monthly news conference last Monday, State Treasurer Ken Miller was asked by reporters to comment on a recent proposal by the Speaker of the House to make permanent the state’s current 1-percent gross production tax rate on horizontally-drilled wells. Since then, the Treasurer’s Office has received numerous requests for additional comments.
Treasurer Miller offered the following statement:
“Oklahoma’s oil and gas companies have long been good corporate citizens and our partners in bettering our state. I am proud to have authored bills in 2009 and 2010 extending both horizontal and deep well incentives, and believe they have contributed to our economic growth.
“In my response to reporters’ questions, I mentioned just one of several alternatives I have previously put forth for consideration. It was not meant to be interpreted as a formal policy position because this is an ongoing discussion between many public officials and industry leaders.
“As I said at the news conference, I don’t think we need to be increasing taxes on the energy industry. But the 2015 incentive expiration provides the opportunity to modernize the state’s energy tax policy.
“I generally favor tax policy that more broadly applies lower and flatter rates. There could be merit to unifying and simplifying the energy tax code with a lower flat rate on all new production, but maybe it can’t be that simple. There could also be merit to a tiered extraction tax system that recognizes the high cost of horizontal drilling and the efforts of those creating jobs by actively exploring and expending capital.
“My position on statutory tax incentives remains the same as it was throughout my legislative service and when I served on the Task Force on Tax Credits & Economic Incentives two years ago. The task force unanimously adopted the position that all tax incentives should have sunset dates to allow for assessment to make sure they are meeting their intended goals.
“Because horizontal drilling has become standard operating procedure and is a permanent change for the industry, we should consider moving away from the concept of a temporary incentive to a permanent energy tax code to provide more certainty and stability for producers.”
EDITOR’S NOTE: For additional details on Treasurer Miller’s energy tax policy views, please read the July 2013 edition of the Oklahoma Economic Report at http://www.ok.gov/treasurer/documents/OER_7-31-13.pdf.
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For more information contact:
Tim Allen, Deputy Treasurer for Communications & Program Administration