UPDATE: (Part of ) Natural Gas Industry "Agrees" To Governor's Tax Proposal
Yeah, right. They agreed about as much as a corner drug store "agrees" to pay for "protection" from the mob. I'll be really surprised if this "agreement" causes enough legislators to vote for it.
This whole situation is positively shameful. The governor of the state, with no revenue shortfall, is raising taxes just to be in line with neighboring states, supposedly. Well, like I've said, if that's the case, I want him to remove the income tax to be in line with neighboring states.
This is a racket.
Here's the link.
UPDATE: I keep getting this emailed to me, so I thought I'd go ahead and publish it. Here's the proposal that (some of) the natural gas industry has "agreed" to:
March 11, 2008
SEVERANCE TAX PROPOSAL
1. Base Rate
The current severance tax rate on natural gas production ($0.003 per mcf) would be increased to five percent (5%) of the Proceeds of the gas at the point of severance (the "base rate"). "Proceeds" would be defined as the monies received by the producer from the sale of the gas less the expenses of dehydrating, treating, compressing and delivering the gas to the purchaser.
2. Reduced Tax Rate for Cost Recovery
High Cost Wells would qualify for a reduced rate for cost recovery of one and one-half percent (1.5%) for the first thirty six (36) months of production from the well. A Taxpayer with a High Cost Gas Well which has not recovered the costs from the total proceeds of the well within the thirty six (36) month period may apply to the Department of Finance and Administration for up to twelve (12) additional months to recover the costs. The additional period shall expire in twelve (12) months or at such time the cost of the well is recovered, whichever comes first.
All other gas wells drilled in Arkansas that are capable of production in commercial quantities would qualify for a severance tax reduction at the rate of one and one-half percent (1.5%) for the first twenty-four (24) months of production from the well.
The time period for purposes of the Reduced Rate for Cost Recovery shall be calculated from the date the well originally began production, whether before or after the effective date of the new tax.
3. Marginal Gas Wells
a. Gas wells, other than High Cost Wells, that are incapable of producing more than 250 mcf per day, would be classified as “marginal gas wells" and would qualify for a severance tax rate reduction. High Cost Wells that are incapable of producing more than 100 mcf per day would be classified as “marginal gas wells” and would qualify for a severance tax rate reduction.
b. The severance tax rate for all such marginal gas wells would be one percent and one-quarter percent (1.25%) of the Proceeds.
c. All marginal gas wells shall be certified as such by the Arkansas Oil & Gas Commission ("AOGC"), using the AOGC's existing wellhead deliverability test methodology.
4. The new law shall be effective January 1, 2009.
5. The tax shall be distributed 95% to highways and roads and 5% to general revenue.
6. Pursuant to meetings with and the request of royalty owner representatives, the royalty owners will receive the same deductions as the production companies.
---
Originally published 3/11/08 at 12:28 p.m.
This whole situation is positively shameful. The governor of the state, with no revenue shortfall, is raising taxes just to be in line with neighboring states, supposedly. Well, like I've said, if that's the case, I want him to remove the income tax to be in line with neighboring states.
This is a racket.
Here's the link.
UPDATE: I keep getting this emailed to me, so I thought I'd go ahead and publish it. Here's the proposal that (some of) the natural gas industry has "agreed" to:
March 11, 2008
SEVERANCE TAX PROPOSAL
1. Base Rate
The current severance tax rate on natural gas production ($0.003 per mcf) would be increased to five percent (5%) of the Proceeds of the gas at the point of severance (the "base rate"). "Proceeds" would be defined as the monies received by the producer from the sale of the gas less the expenses of dehydrating, treating, compressing and delivering the gas to the purchaser.
2. Reduced Tax Rate for Cost Recovery
High Cost Wells would qualify for a reduced rate for cost recovery of one and one-half percent (1.5%) for the first thirty six (36) months of production from the well. A Taxpayer with a High Cost Gas Well which has not recovered the costs from the total proceeds of the well within the thirty six (36) month period may apply to the Department of Finance and Administration for up to twelve (12) additional months to recover the costs. The additional period shall expire in twelve (12) months or at such time the cost of the well is recovered, whichever comes first.
All other gas wells drilled in Arkansas that are capable of production in commercial quantities would qualify for a severance tax reduction at the rate of one and one-half percent (1.5%) for the first twenty-four (24) months of production from the well.
The time period for purposes of the Reduced Rate for Cost Recovery shall be calculated from the date the well originally began production, whether before or after the effective date of the new tax.
3. Marginal Gas Wells
a. Gas wells, other than High Cost Wells, that are incapable of producing more than 250 mcf per day, would be classified as “marginal gas wells" and would qualify for a severance tax rate reduction. High Cost Wells that are incapable of producing more than 100 mcf per day would be classified as “marginal gas wells” and would qualify for a severance tax rate reduction.
b. The severance tax rate for all such marginal gas wells would be one percent and one-quarter percent (1.25%) of the Proceeds.
c. All marginal gas wells shall be certified as such by the Arkansas Oil & Gas Commission ("AOGC"), using the AOGC's existing wellhead deliverability test methodology.
4. The new law shall be effective January 1, 2009.
5. The tax shall be distributed 95% to highways and roads and 5% to general revenue.
6. Pursuant to meetings with and the request of royalty owner representatives, the royalty owners will receive the same deductions as the production companies.
---
Originally published 3/11/08 at 12:28 p.m.
posted by Henry Rearden at
5:48 PM
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