Rapid growth of OK business tax breaks for oil, gas and wind questioned
November 17, 2014 | By
Doug Peeples
Oklahoma's business tax subsidies have grown from $356 million to $760 million in 2014, a little over 10 percent of the state's $7.2 billion budget.
That growth is largely attributed to the tax breaks provided for the state's oil, gas and wind energy industries, according to an analysis obtained by public policy news organization Oklahoma Watch from the Oklahoma Tax Commission, Oklahoma Insurance Department and Senate Finance Committee. Democratic and Republican legislative leaders have said the growth in the tax breaks was concerning. Several tax breaks already have been trimmed or eliminated and some have had sunset clauses attached to them. There is, however, a broad range of opinions among legislators and others about the tax incentive programs. Senate Finance Committee Chairman Mike Mazzei, R-Tulsa, likened the tax breaks to a "corporate giveaway" and said they would hamper legislators' in other tax reform efforts and in their ability to lower tax rates for residents, small business and industries not involved in oil and gas. Rep. David Dank, R-Oklahoma City, feels otherwise. "We're doing the geology for and the engineering for wells that are being drilled in Ohio and West Virginia and Pennsylvania. I want that to continue," he was quoted as saying in Oklahoma Watch. The Oklahoma Chamber of Commerce conducted its own economic assessment of the state's oil and gas tax policy which was released in January. That assessment supported the tax incentives and determined that they are necessary to ensure the state can continue to be competitive. In part, the Chamber assessment says, "Several clear economic objectives underlie the state's current mix of oil and gas tax policy provisions. These include encouraging long-run growth in the industry, expanding the production of crude oil and natural gas in the state, and dampening the effect of oil and gas price volatility on the industry and state economy. More recently, drilling-based tax provisions have aided the industry in its ongoing transition to unconventional methods of oil and gas production. All of these efforts work more broadly to help Oklahoma maintain its competitive posture relative to other states as competition for oil and gas activity intensifies." While some of the state's tax breaks, such as exempting prescription drugs from the sales tax, have been well-received and benefit many, critics of the oil and gas breaks say they have cut state revenues by $486 million in 2014 and cut into its ability to support education, health care and other areas. Another big issue within the larger overall oil and gas tax breaks discussion is the state's gross production tax. While there are strong feelings on both sides about cutting the production tax, it is probably far less vulnerable than the wind power tax credit. Critics say the wind industry has not yielded enough jobs for the tax credit to be worthwhile. Needless to say, the tax break debate is far from over. For more:
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