BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 241 HEARING: 5/1/13
AUTHOR: Evans FISCAL: Yes
VERSION: 4/24/13 TAX LEVY: No
CONSULTANT: Miller
OIL SEVERENCE TAX LAW
Imposes a 9.5% tax on oil and a to be determined percentage tax
on natural gas for the privilege of extracting oil and natural
gas in this state.
Background and Existing Law
Taxes and fees Existing law imposes various taxes, fees and
assessments on oil and natural gas. None of these are an "oil
severance tax" or a tax on extraction. Existing taxes and
exceptions include:
Regulatory Assessment . The Division of Oil, Gas, and
Geothermal Resources of the Department of Conservation
(DOC) imposes a fee on each barrel of oil and each 10,000
cubic feet of natural gas produced. Producers of oil and
gas are required to pay the fee, which is currently at a
rate of $0.1062988 per barrel or 10,000 cubic feet of
natural gas. The fees are assessed for purposes of
financing the regulatory work of the division.
Oil Spill Prevention and Administration Fee . Existing
law also imposes an Oil Spill Prevention and Administration
Fee of $0.05 per barrel on crude oil when it is received at
a marine terminal from within the state. The fee is also
imposed on operators of pipelines transporting oil in the
state across, under, or through marine waters. This fee is
administered by BOE and deposited into the Oil Spill
Prevention and Administration Fund.
Oil Spill Response Fee . The BOE also collects an oil
spill response fee paid by specified marine terminal
operators, pipeline operators and refiners in an amount not
exceeding $0.25 per barrel of petroleum product or crude
SB 241 -- 4/24/13 -- PageB
oil. The fees are deposited into the Oil Spill Response
Trust Fund, which is capped at $50 million, at which point
collection ceases; the fund is currently at its maximum
level.
Property tax : Existing state law assesses the value of
the property and the "proven reserves" as real property at
the time of purchase (plus 2% annual growth in value). The
property is taxed at the 1% Proposition 13 protected rate.
According to Proposition 13, the land is only reassessed
upon change of ownership and property improvement.
Corporate tax . Oil companies are taxed at the state
corporate tax rate of 8.84% of profits or net income.
Percent Depletion Allowance: Under state and federal
law, taxpayers may deduct up to 100% (oil and gas) of the
net income for resource depletion such as oil extraction.
California conforms to federal law to encourage taxpayers
to explore and develop oil, gas and other mineral
resources.
Enhance oil recovery costs: Certain independent oil
producers are allowed a nonrefundable credit equal to 5% of
the qualified enhanced oil recovery costs for projects
located in California with restrictions on barrel prices
($48 in 2010). The credit hasn't been available since 2005
because oil prices have been too high.
Sales and Use Tax . Only the local portion of the sales
and use tax is collected on gasoline (2.5% of the overall
state rate plus up to 2% of locally imposed taxes). The
"gas tax swap" essentially traded the sales tax on gasoline
for the excise tax (see below). The BOE must increase or
decrease the excise tax annually to match what the sales
tax would have been. As of July 1, 2011 until July 1,
2015, the state and local sales and use tax rate for diesel
fuel is 5.38%.
Excise Taxes . Existing law imposes a $0.18 per gallon
excise tax on each gallon of gasoline sold in the state of
California. In addition, state law, known as the "gas tax
swap," imposes an additional excise tax on gasoline that
adjusts annually to equal the amount of state sales tax
SB 241 -- 4/24/13 -- PageC
that the state would charge on gasoline sales if they were
subject to the sales tax. Currently, the total excise tax
paid on a gallon of gasoline is $0.36 per gallon, and on
July 1 of this year it will be $0.39.5. Existing law also
imposes a use fuel tax at a rate of $0.09 per gallon on
blended fuels, such as ethanol, which are those that are
not more than 15% gasoline in content. The use fuel tax is
collected at the point of retail sale. Federal law imposes
an additional per gallon tax on gasoline and diesel fuel of
$0.18.4 and $0.24.4, respectively.
Royalty payments . State law assesses royalty payments
between 16-50% for deposit into the State Lands Commission
for oil extraction on state lands.
Local oil severance taxes . At least three jurisdictions
have imposed local oil severance taxes: Long Beach, Signal
Hill and Beverly Hills.
Natural Gas Surcharge<1> . The Public Utilities
Commission (PUC) sets different natural gas surcharges
throughout the state that vary by location and provider.
The surcharge is applied to all consumption except natural
gas used to generate power for sale, resold to end users,
used for enhanced oil recovery, utilized in cogeneration
technology, or produced in California and transported on a
proprietary pipeline.
Oil Production . California is the fourth largest producer of oil
in the country with 526,000 barrels of oil per day behind Texas
(2.22 million barrels of oil per day); North Dakota (769,000
barrels of oil per day) and Alaska (556,000 barrels of oil per
day).
Proposed Law
Taxing Authority . Senate Bill 241 creates the oil severance tax
law and imposes a tax on any operator for the privilege of
---------------------------
<1>
Natural gas surcharge rates can be found at:
http://www.boe.ca.gov/pdf/boe500ng.pdf
SB 241 -- 4/24/13 -- PageD
extracting oil or natural gas. The bill sets the tax rates at
9.5% per barrel, based on an average price as determined by the
DOC for oil and does not specify a rate for natural gas but also
bases it on the estimates from the DOC. The tax is administered
by the BOE with input on the price of oil and natural gas from
the DOC.
SB 241 requires that on or before December 1st and June 1st of
each year, the DOC shall determine the average price per barrel
of California oil and the average price for natural gas for the
six-month period ending October 31st and April 30th,
respectively. The DOC shall base its determination on
California's price for oil and gas as determined by the United
States Energy Information Administration's (EIA) First Purchase
Report for both oil and gas.
The definitions of many terms including "operator," "barrel of
oil," and "gas," are consistent with existing law. The bill
also defines "stripper well" as a well that has been certified
by the DOC as incapable of producing more than 10 barrels of oil
per day. Stripper wells are exempt to the extent that they
maintain their status with the DOC.
Any operator that fails to comply with the provisions of this
tax is assessed an unspecified penalty by the BOE for each
instance the operator violates the section.
Funding Authority . SB 241 creates the California Higher
Education Fund and requires that all proceeds, less refunds and
costs of administration, be deposited into the fund as follows:
93%, in equal shares, to the Regents of the University
of California, the Trustees of the California State
University, and the Board of Governors of the California
Community Colleges
7% is dedicated to the Department of Parks and
Recreation for the maintenance and improvement of state
parks.
Other provisions . The bill provides that the taxes imposed by
this act are "General Fund proceeds of taxes" and must therefore
be dedicated to Proposition 98 (Section 8 of Article XVI of the
California Constitution).
SB 241 -- 4/24/13 -- PageE
The severance tax would be in addition to any other taxes
imposed by law, including and without limitation, any ad valorem
taxes imposed by the state, or any political subdivision of the
state, or any local business license taxes that may be incurred
as a privilege of severing oil or gas from the earth or water or
doing business in that locality.
SB 214 specifies that the taxes imposed by the law shall not be
passed through to consumers by way of higher prices and requires
the BOE to investigate any instance where operators may have
attempted to gouge consumers by using the tax to materially
raise the price of oil, natural gas or related products.
State Revenue Impact
The LAO, in a letter to Senator Fuller dated April 15, 2013,
estimates that at 9.9%, an oil severance tax alone would
generate $1.5-$2 billion in new revenue. The BOE estimate is
still pending for both the oil and gas provisions.
Comments
1. Purpose of the bill . According to the author: "California
has come a long way in easing its wall of debt during the past
two years. However, our progress has come with many difficult
choices including cuts in funding for vital programs and
services. After an election in which the majority of the voters
in California voted to raise their own taxes to fund education
and other crucial services, now is the time for our state to
join the rest of the other oil producing states and enact an oil
severance tax on big oil companies to help strengthen our
economy. California is the only state of the top ten oil
producing states in the nation that does not charge a severance
tax on every barrel of oil taken from our state lands and sea
bed.
Oil producing states such as Alaska charge a 25% tax and the
state of Texas charges 4.75%. Opponents of an oil severance tax
have claimed for years that the oil companies will pass any
taxes on to consumers, but that is not the case. According to a
study by the Rand Corporation, which investigated the impacts of
a 6% oil severance tax, the tax cannot be passed onto consumers
SB 241 -- 4/24/13 -- PageF
and it will not affect production. Virtually all economists
agree that the world market sets the price of oil, and that
underlying taxes whether from Texas, Kuwait or California, are
not passed through at the pump."
2. High costs, fewer jobs . The opposition to this measure call
it a "job killer" and state that the bill would add to the
state's already high tax burden on oil production, and
transportation fuels in this state. The new severance tax
should make California's combined tax on oil production one of
the highest in the nation. The higher taxes would add to
producer costs which would discourage in-state production
leading to direct job losses for oil field workers and also
indirect job losses that provide support for oil serves
operations. Furthermore, decreased production will call for
greater imports to meet California's energy needs which will
necessitate higher transportation costs and greater greenhouse
gas emissions. The opponents also point to the potential
development of the Monterey Shale which, according to the
"economists" and the USC Price School of Public Policy and the
Communications Institute, could produce up to $2.8 million jobs;
increase GDP by up to 14.3% and grow state and local revenues by
up to $24.6 billion. Opponents point out that an oil severance
tax is a deterrent to the extracting oil from the Monterey
Shale.
3. Fill in the blank . The bill leaves a number of issues blank
which the author will resolve before the hearing including the
rate of the gas tax, the amount of the penalties and the
determination of the stripper wells' production.
4. California's relative taxation of oil . California is the
nation's fourth largest producer of oil behind Alaska and Texas.
In addition, California is the only major oil producing state
that does not charge a severance tax. Opponents however, argue
that California's oil resources are already among the most
heavily taxed in the country when one considers the combined tax
burden on oil production. In 2011, the Assembly Committee on
Revenue & Taxation asked staff at the Franchise Tax Board and
the BOE to calculate the combined tax burden per barrel of oil
in both California and Texas. After accounting for regulatory
fees, applicable severance taxes, property taxes, and income and
franchise taxes, this analysis found that California's combined
tax burden on oil production was $4.22 per barrel in 2008. In
SB 241 -- 4/24/13 -- PageG
Texas, by contrast, the combined tax burden on oil production
was more than three times higher at $14.33 per barrel.
Opponents argue that these relative numbers are misleading for a
number of reasons: (1) It is impossible to determine the income
tax per barrel of oil produced; (2) Property taxes are not
linked to production and the basis for calculation in Texas
versus California are very different; (3) California's
regulatory fees within DOC are open ended whereas all Texas'
regulatory fees are fixed.
5. Price at the pump ? This measure provides that the cost of
the severance tax shall not be passed on to consumers. While
this provision may be both difficult and costly to enforce, the
tax itself will not likely affect gas prices. In addition, this
bill does not specify penalties for noncompliance.
Nevertheless, the Legislative Analyst's Office noted in its 2006
report on Proposition 87, which would have imposed a similar
severance tax, that market forces ensure that the oil severance
tax would not be passed on to consumers. Because California oil
refiners have many options for purchasing crude oil in the
global oil market, California oil producers must maintain
competitive prices to retain their share of the market.
Furthermore, not all oil is the same; for example, California
crude oil is a heavy crude and purchasers that need such crude
for their gasoline, for example, will only purchase from
California unless the price fluctuates wildly, which is unlikely
given the small percentage of the world's oil produced in
California. Finally, oil prices are not dependent on California
laws at all, but instead on market supply and demand, the oil
"futures" price, (taxpayers that wish to hedge against large
price increases, lock in contracts at a price expected to be
lower) and market sentiment. None of these factors considers
the cost of doing business in any oil producing state or
country.
6. Property tax revenue . According to an LAO letter to Senator
Fuller dated April 15, 2013, an oil severance tax would reduce
property tax revenues to local governments because for most
properties, "the severance tax would reduce the volume of
existing proved reserves in the year the severance tax is
imposed because the tax would reduce the amount of oil that is
profitable to extract." Kern, Los Angeles, Ventura and Fresno
would be the most significantly affected (Kern would be
disproportionately affected because it has the greatest number
SB 241 -- 4/24/13 -- PageH
of facilities). The author will amend the bill in Committee as
follows: Any local property tax reductions which may result from
the imposition of the tax in this section shall be reimbursed
from the revenues received from the imposition of the tax.
7. Volatility . Oil prices are volatile; therefore, any tax
associated with the tax will be volatile over time unless the
tax is a fixed price per barrel. A review of states indicates
that the tax is almost always imposed as a percent of barrel
prices of oil. This bill requires that DOC determine an average
price of barrels of oil and gas two times a year in an attempt
to minimize the volatility. To avoid becoming overly dependent
on this revenue source, the Committee may wish to consider
reserving part of the funds in a "rainy day" fund rather than
using the entirety of the money immediately.
8. Oil taxes and severance taxes by state . Most other oil
producing states impose a tax on extraction. The following
chart, provided by the National Conference of State Legislatures
(NCSL) provides a summary.
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|Alabama |Oil and Gas |� 8 percent of gross value at |
| |Privilege Tax | point of production |
| |on Production | |
| | |� 4 percent of gross value at |
| | | point of incremental production |
| | | for enhanced recovery projects |
| | | |
| | |� 4 percent if oil wells produce |
| | | 25 barrels or less per day or if |
| | | gas wells produce 200,000 cubic |
| | | feet or less gas per day |
| | | |
| | |� 6 percent of gross value at |
| | | point of production for certain |
| | | on-shore and off-shore wells. |
| | | |
| | |� 50 percent rate reduction for |
| | | wells permitted by the oil and |
| | | gas board on or after July 1, |
| | | 1996 and before July 1, 2002 for |
| | | 5 years from initial production, |
SB 241 -- 4/24/13 -- PageI
| | | except for replacement wells for |
| | | which the initial permit was |
| | |dated before July 1, 1996. |
| | | |
|---------------+--------------+-----------------------------------|
|Alaska |Petroleum |� Ranges from 25 percent to 50 |
| |Profits Tax | percent depending on net value |
| |(PPT) | of oil and gas, which is the |
| | | value at point of production |
| | | minus certain lease expenditures |
| | | |
| | |� 22.5 percent net value at |
| | | wellhead |
| | | |
| | |� There is an additional surcharge |
| | | for each dollar when net value |
| | | exceeds $40 per barrel. This |
| | | cannot exceed 25 percent of the |
| | | monthly production tax value of |
| | | taxable oil and gas. |
| | | |
| | |� Conservation surcharge of 4 |
| | | cents per barrel and an |
| | | additional 1 cent per barrel if |
| | | there is less than $50 million |
| | | in the Hazardous Release Fund |
| | | |
|---------------+--------------+-----------------------------------|
|Arizona |Severance Tax |� 3.125 percent for oil and gas |
| | | production and nonmetal mining |
| | | |
|---------------+--------------+-----------------------------------|
|Arkansas |Oil and Gas |� 0.3 of $0.01 cent per MCF for |
| |Conservation | natural gas |
| |Tax | |
| | |� Four percent to five percent |
| | | depending on production levels |
| | | for crude oil |
| | | |
|---------------+--------------+-----------------------------------|
|California |Oil and Gas |� Rate determined annually by |
| |Production | Department of Conservation |
| |Assessment | |
|---------------+--------------+-----------------------------------|
SB 241 -- 4/24/13 -- PageJ
|Colorado |Severance Tax |� Two to five percent based on |
| | | gross income for oil, gas, |
| | | carbon dioxide and coalbed |
| | | methane |
| | | |
| | |� Four percent of gross proceeds |
| | | on production exceeding 15,000 |
| | | tons per day for oil shal |
| | | |
|---------------+--------------+-----------------------------------|
| |Oil and Gas |� Maximum 1.5 mills/$1 of market |
| |Conservation | value at wellhead |
| |Levy | |
|---------------+--------------+-----------------------------------|
|Florida |Oil, Gas and |� Five percent of gross value for |
| |Sulfur | small well oil |
| |Production | |
| |Tax |� Eight percent of gross value for |
| | | all other and an additional 12.5 |
| | | percent for escaped oil |
| | | |
| | |� For gas, the gas base rate times |
| | | the gas base adjustment rate |
| | | each fiscal yea |
| | | |
|---------------+--------------+-----------------------------------|
|Idaho |Oil and Gas |� Maximum of five mills/bbl. of |
| |Production | oil and five mills/50,000 cubic |
| |Tax | feet of gas |
| | | |
|---------------+--------------+-----------------------------------|
| |Additional |� Two percent of market value at |
| |Oil and Gas | site of production |
| |Production | |
| |Tax | |
|---------------+--------------+-----------------------------------|
|Indiana |Petroleum |� One percent of value or $0.24 |
| |Production | per barrel for oil, or $0.03 per |
| |Tax | 1,000 cubic feet of gas |
| | | (whichever is greater) |
| | | |
|---------------+--------------+-----------------------------------|
|Kansas |Severance Tax |� Eight percent of gross value of |
| | | oil and gas, less property tax |
SB 241 -- 4/24/13 -- PageK
| | | credit of 3.67 percent |
| | | |
|---------------+--------------+-----------------------------------|
| |Oil and Gas |� 91 mills/bbl crude oil or |
| |Conservation | petroleum marketed or used each |
| |Tax | month |
| | | |
| | |� 12.9 mills/1,000 cubic feet of |
| | | gas sold or marketed each mont |
| | | |
|---------------+--------------+-----------------------------------|
|Kentucky |Oil |� 4.5 percent of market value |
| |Production | |
| |Tax | |
|---------------+--------------+-----------------------------------|
| |Natural |� 4.5 percent of gross value, less |
| |Resource | transportation expenses |
| |Severance Tax | |
|---------------+--------------+-----------------------------------|
|Louisiana |Natural |� Varies according to substance |
| |Resources | |
| |Severance Tax | |
|---------------+--------------+-----------------------------------|
| |Oil Field |� Varies according to type of well |
| |Restoration | and production |
| |Fee | |
|---------------+--------------+-----------------------------------|
|Michigan |Gas and Oil |� Five percent for gas |
| |Severance Tax | |
| | |� 6.6 percent for oil |
| | | |
| | |� Four percent (oil from stripper |
| | | wells and marginal properties) |
| | | of gross cash market value of |
| | | the total production |
| | | |
| | |� Maximum additional fee of 1 |
| | | percent gross cash market value |
| | | on all oil and gas produced in |
| | |state in previous year |
| | | |
|---------------+--------------+-----------------------------------|
|Mississippi |Oil and Gas |� Six percent of the value at |
| |Severance Tax | point of gas production |
SB 241 -- 4/24/13 -- PageL
| | | |
| | |� Three percent of gross value of |
| | | occluded natural gas from coal |
| | | seams at point of production for |
| | | the well's first five years |
| | | |
| | |� Maximum 35 mills/bbl. oil or |
| | | four mills/1,000 cubic feet of |
| | | gas (Oil and Gas Board |
| | | maintenance tax) |
| | | |
| | |� Six percent of value at the |
| | | point of oil production |
| | | |
| | |� Three percent of value at |
| | | production when enhanced oil |
| | | recovery is used |
| | | |
|---------------+--------------+-----------------------------------|
|Montana |Oil or Gas |� Maximum of 0.3 percent on the |
| |Conservation | market value of each barrel of |
| |Tax | crude petroleum oil or 10,000 |
| | | cubic feet of natural gas |
| | | produced, saved and marketed or |
| | | stored within or exported from |
| | | the state |
| | | |
|---------------+--------------+-----------------------------------|
| |Oil or |� Varies from 0.5 percent to 14.8 |
| |Natural Gas | percent according to the well |
| |Production | and type of production |
| |Tax | |
|---------------+--------------+-----------------------------------|
|Nebraska |Oil and Gas |� Three percent of value of |
| |Severance Tax | nonstripper oil and natural gas |
| | | |
|---------------+--------------+-----------------------------------|
| |Oil and Gas |� Two percent of value of stripper |
| |Conservation | oil. Maximum of 15 mills/$1 of |
| |Tax | value at wellhead |
| | | |
|---------------+--------------+-----------------------------------|
|Nevada |Oil and Gas |� $50/mills/bbl of oil and 50 |
| |Conservation | mills/50,000 cubic feet of gas |
SB 241 -- 4/24/13 -- PageM
| |Tax | |
|---------------+--------------+-----------------------------------|
|New Hampshire |Refined |� 0.1 percent of fair market value|
| |Petroleum | |
| |Products Tax | |
|---------------+--------------+-----------------------------------|
| |Excavation |� $0.02 per cubic yard of earth |
| |Tax | excavated |
| | | |
|---------------+--------------+-----------------------------------|
|New Mexico |Oil and Gas |� 3.75 percent of value of oil, |
| |Severance Tax | other liquid hydrocarbons, |
| | | natural gas and carbon dioxide |
| | | |
|---------------+--------------+-----------------------------------|
| |Oil and Gas | 3.15 percent of value of oil, |
| |Emergency |other liquid hydrocarbons and |
| |School Tax |carbon dioxide; Four percent of |
| | |the value of natural gas |
|---------------+--------------+-----------------------------------|
| |Natural Gas |� $0.0220/mmBtu tax on the volume |
| |Processor's | |
| |Tax | |
|---------------+--------------+-----------------------------------|
| |Oil and Gas |� Based on property tax in the |
| |Ad Valorem | district of production |
| |Production | |
| |Tax | |
|---------------+--------------+-----------------------------------|
| |Oil and Gas |� 0.19 percent of value |
| |Conservation | |
| |Tax | |
|---------------+--------------+-----------------------------------|
|North Carolina |Oil and Gas |� Maximum of five mills/barrel of |
| |Conservation | oil and 0.5 mill/1,000 cubic |
| |Tax | feet of gas |
| | | |
|---------------+--------------+-----------------------------------|
|North Dakota |Oil Gross |� Five percent of gross value at |
| |Production | the well |
| |Tax | |
|---------------+--------------+-----------------------------------|
| |Gas Gross |� $0.04 per 1,000 cubic feet of |
| |Production | gas produced. The rate is |
SB 241 -- 4/24/13 -- PageN
| |Tax | subject to a gas rate adjustment |
| | | each fiscal year. |
| | | |
|---------------+--------------+-----------------------------------|
| |Oil |� 6.5 percent of gross value at |
| |Extraction | the well. Exceptions exist for |
| |Tax | certain production volumes and |
| | | incentives for enhanced recovery |
| | | projects. |
| | | |
|---------------+--------------+-----------------------------------|
|Ohio |Resource |� $0.10/bbl of oil |
| |Severance Tax | |
| | |� $0.025/1,000 cubic feet of |
| | | natural gas |
| | | |
|---------------+--------------+-----------------------------------|
|Oklahoma |Oil, Gas and |� Seven percent if greater than |
| |Mineral Gross | $2.10 mcf; four percent if |
| |Production | greater than $1.75 mcf but less |
| |Tax and | than $2.10 mcf; and one percent |
| |Petroleum | if less than $1.75 mcf natural |
| |Excise Tax | gas and casinghead gas (a |
| | | byproduct of natural gas |
| | | extraction), and 0.95 percent |
| | | levied on crude oil, casinghead |
| | | gas and natural gas. |
| | | |
| | |� Oil Gross Production Tax is |
| | | variable based on the average |
| | | price of Oklahoma oil. The tax |
| | | rate is seven percent if average |
| | | price is equal to or exceeds |
| | | $17/bbl; four percent if the |
| | | average price is less than |
| | | $17/bbl but equal to or exceeds |
| | | $14/bbl; and one percent if the |
| | | average price is less than |
| | |$14/bbl. |
| | | |
|---------------+--------------+-----------------------------------|
|Oregon |Oil and Gas |� Six percent of gross value at |
| |Production | well |
| |Tax | |
SB 241 -- 4/24/13 -- PageO
|---------------+--------------+-----------------------------------|
|South Dakota |Energy |� 4.5 percent of taxable value of |
| |Minerals | all energy minerals |
| |Severance Tax | |
|---------------+--------------+-----------------------------------|
| |Conservation |� 2.4 mills of taxable value of |
| |Tax | all energy minerals |
| | | |
|---------------+--------------+-----------------------------------|
|Tennessee |Oil and Gas |� Three percent of sales price |
| |Severance Tax | |
|---------------+--------------+-----------------------------------|
|Texas |Natural Gas |� 7.5 percent of market value of |
| |Production | gas |
| |Tax | |
| | |� Condensate Production Tax is 4.6 |
| | | percent of market value of gas |
| | | |
|---------------+--------------+-----------------------------------|
| |Oil-Field |� 5/8 of $0.01/barrel |
| |Cleanup | |
| |Regulatory |� 1/15 of $0.01/1,000 cubic feet |
| |Fees | of gas |
| | | |
|---------------+--------------+-----------------------------------|
|Utah |Oil and Gas |� Three percent of value for the |
| |Severance Tax | first $13 per barrel of oil and |
| | | five percent if the value is |
| | | $13.01 or higher |
| | | |
| | |� Three percent of value for the |
| | | first $1.50/mcf and five percent |
| | | if the value is $1.51 or higher |
| | | |
| | |� Four percent of taxable value of |
| | | natural gas liquids |
| | | |
|---------------+--------------+-----------------------------------|
| |Oil and Gas |� 0.002 percent of market value at |
| |Conservation | the wellhead |
| |Fee | |
|---------------+--------------+-----------------------------------|
|West Virginia |Natural |� Five percent of gross value for |
| |Resource | natural gas; ten percent of net |
SB 241 -- 4/24/13 -- PageP
| |Severance | tax is distributed to local |
| |Taxes | governments |
| | | |
| | |� Five percent of gross value for |
| | | oil; ten percent of net tax is |
| | | distributed to local governments |
| | | |
| | |� Additional tax for workers' |
| | | compensation debt reduction rate |
| | | of $0.047/mcf of natural gas |
| | | produced |
| | | |
|---------------+--------------+-----------------------------------|
|Wisconsin |Oil and Gas |� Seven percent of market value |
| |Severance Tax | of oil or gas at the mouth of |
| | | the well |
| | | |
|---------------+--------------+-----------------------------------|
|Wyoming |Severance |� Six percent on crude oil, lease |
| |Taxes | condensate or natural gas |
| | | |
| | |� Four percent for stripper |
| | |oil |
| | | |
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9. Related Legislation - There have been several attempts at
similar bills in the past:
AB 1326 (Furutani), 2011, Imposed a 12.5% tax on oil and
gas severed in this state.
AB 1604 (Nava), 2010, Imposed a tax at the rate of 10%
of the gross value of each barrel of oil severed. The bill
was held in the Assembly Revenue & Taxation Committee.
AB 656 (Torrico), 2010, Imposed an oil and gas severance
tax at 12.5% to fund higher education. AB 656 was held in
the Senate Education Committee.
ABx3 9 (Nunez), 2008, Imposed a 6% oil severance tax and
a 2% surtax on that portion of taxable income or net
income, respectively, in excess of $10 million, of
taxpayers engaged in the petroleum industry. AB x3 9
SB 241 -- 4/24/13 -- PageQ
failed passage on the Assembly Floor.
AB 2442 (Klehs), 2006, Imposed a surtax at the rate of
2% on net income in excess of $10,000,000 that is
apportioned to California and arises from business
activities in the petroleum industry. AB 2442 failed
passage on the Assembly Floor.
AB 673 (Klehs), 2006, Imposed a 2.5% tax on the windfall
profits of petroleum producers and refiners. AB 673 failed
passage on the Assembly Floor.
ABx1 128 (Corbett) and ABx2 2 (Corbett), 2001, Imposed a
tax on the windfall profits of electrical energy companies
during the electricity crisis in 2001-02. ABx1 128 was
held by the Assembly Appropriations Committee; ABx2 2
failed passage on the Assembly floor.
SBx1 1 and SBx2 1 (Soto), 2001, Imposed a windfall
profits tax on sellers of electricity and provided that the
amount collected would be refunded to individuals that
filed a tax return. SBx1 1 was held by the Assembly when
the first extraordinary session closed; SBx2 1 failed
passage on the Assembly Floor.
SB 1777 (Burton), 2000, Imposed a Petroleum Windfall
Profits Tax on certain taxpayers engaged in petroleum
refining. SB 1777 was held in the Senate Rules Committee.
SB 14 (Thompson), 1996, Imposed a Petroleum Windfall
Profits Tax on certain taxpayers engaged in petroleum
refining. SB 14 failed passage in this committee.
AB 336 (Villaraigosa), 1996, Imposed a 6% oil severance
tax on certain oil producers. AB 336 failed to pass out of
this committee.
AB 1693 (Margolin), 1994, Imposed an oil severance tax
on certain oil producers at a rate of 6% of gross market
value. AB 1693 failed to pass out of this committee.
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Support and Opposition (4/25/13)
Support : University of California Student Association (UCSA) &
California State Student Association (CSSA) (co-sponsors);
California Teachers Association; AFSCME, California Federation
of Teacher; Faculty Association of Community Colleges;
California Faculty Association; California School Employees
Association; California State University; University of
California; State Building and Construction Trades Council of
California; California State parks Foundation; Sierra Club;
Courage Campaign; California National Organization for Women;
California Watershed Network; Sacramento River Watershed
Program; Salmonid Federation; Sierra Nevada Alliance; Sonoma
Ecology Center; California Urban Stream Partnership; Northern
California Council of Fly Fishers; California Association of
Resources Conservation District; California Conference Board of
the Amalgamated transit Union; California Conference of
Machinists; California Official Court reporter Association;
California Teamster Public Affairs Council; Coalition for
Enhance Marine Resources; Engineers and Scientists of
California; International Longshore and warehouse Union; Jockeys
guild; Professional & technical Engineers; Unite Here
International Union; United Anglers; United Food and Commercial
Workers; University of California ( in concept); California Tax
Reform Association.
Opposition : California Chamber of Commerce' California
Taxpayers Association; California Manufacturers and Technology
Association; National Federation of Independent
Business/California; Howard Jarvis Taxpayers Association;
Coalition of Energy Users
Small Business Action Committee; Black Business Association; San
Diego Urban Economic Corporation; Contra Costa Taxpayers
Association; Sacramento Black Chamber of Commerce; Kern County
Taxpayers Association; Independent Oil Producers Agency; Sutter
County Taxpayers Association; Western States Petroleum
Association ; Carson Black Chamber of Commerce; California
Independent Oil Marketers; Santa Barbara Technology and Industry
Association; Moreno Valley Black Chamber of Commerce; California
Independent Petroleum Association; California Association of
Black Pastors; San Diego Tax Fighters; California Small Business
Alliance.
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