As Pa. debates severance tax, North Dakota may lower its levy

Written by Emily Guerin/Inside Energy | May 6, 2015 2:59 AM

Photo by Flickr user Geof Wilson


(Undated) -- The oil and gas industry pays a ton of money in severance taxes to energy producing states like Colorado, Wyoming and especially North Dakota. When oil prices were high, North Dakota took in about $10.5 million a day. But as prices have fallen, so has revenue. In the midst of this, North Dakota lawmakers have passed a bill to stabilize and lower the state's oil and gas tax rate.

Very few people in the state capitol of Bismarck support the state's current tax system.

Representative Al Carlson, the House Majority Leader, put it this way:

"It was once explained to me that our tax policy is kinda like being on the wheel of fortune," he said. "Because sometimes you can hit the big trip to Hawaii and the next spot can be bankruptcy."

In North Dakota the oil and gas tax rate is pegged to the price of oil. When prices are high, companies pay about 11.5 percent on the value of oil produced. When prices are low for an extended period of time, they pay 5 percent. So in April, Carlson introduced House Bill 1476, which was designed to get rid of that volatility.

"We thought it would be beneficial to have a stable tax system both for the state of North Dakota and for the industry," he explained.

Hear Inside Energy's Emily Guerin's story here.

Inside Energy is public media collaboration focusing on America's energy issues.

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