Lawmakers Should Review Tax Exemptions

The Oklahoma Policy Institute is urging state lawmakers to review tax breaks given to oil and gas producers as the economy continues to decline.

"As the state begins to wrestle with what looks to be enormous and prolonged budget shortfalls, this seems to be the right time for policymakers to carefully review the tax breaks being offered to oil and gas producers and to consider whether there should be some appropriate caps placed on the amount of tax rebates that can be claimed," said David Blatt, OK Policy's Director of Policy, in a press release issued last week.

According to OK Policy, producers have collected $339 million in exemptions over the last five years. A recent study cited by OK Policy showed the tax breaks had little effect on a company’s decision to drill a new well.

OK Policy would like to see more caps on the tax exemptions.

"Applying the cap that is currently in place for deep well drilling to other exempted production, or creating an overall cap on gross production tax rebates would create greater budget certainty over the coming years," said Blatt. "We know that schools, social services, public safety and other vital areas of the state budget are looking at deep cuts. In this environment, limiting the tax breaks offered to producers seems a reasonable way to minimize the impact of cuts to core services and ensure that sacrifices are shared."

OK Policy’s suggestion is prudent and responsible given the state’s current precarious financial situation.

OK Policy is a think tank that works on issues related to poverty and economic opportunity. It provides significant statistical information related to the state’s budget as well.