Business News

MT conservation groups wants oil and gas tax holiday repealed

Posted: Jul 19, 2012 8:58 PM by Marnee Banks - MTN News

HELENA - A conservation group is asking candidates running for office in Montana to consider changing the tax structure for oil and gas companies.

Montana Conservation Voters are comparing the oil and gas companies to a "fat cat" by placing a giant blown up cat in downtown Helena on Thursday.

They say these companies need to start paying their fair share of taxes to help address the impacts of oil and gas development.

In Montana, oil and gas companies pay a lower tax rate of 0.76% for the first 12 -18 months a well is operating. Then after the holiday, the rate jumps to 9.76%

Montana Budget and Policy Center Tax Expert Tara Veazey says these companies go where the oil is.

"To say that they need these tax breaks while middle class families and businesses are making sacrifices everyday defies common sense," Veazey says.

The oil and gas industry claims the tax is an incentive for doing business in Montana.

The Montana Petroleum Association reports it could cost a company upward of $10 million to drill a new well.

Executive Director Dave Galt says the tax holiday allows companies to recoup their initial capital investment.

"The oil companies are heavily taxed: on their equipment, on their income, and on their production. The drilling incentive was done in 1993 and was a tax policy position of the Montana Legislature, and the Governor's office at the time. It actually worked," Galt says.

The Montana Department of Revenue's most recent data shows if the 9% tax rate was applied from the beginning it would have brought in more than $500 million between the 2003 & 2007.

Both sides expect Montana lawmakers will take up this issue next legislative session.