HELENA – A bill aimed at ending oil and gas industry tax breaks would generate more revenue for communities affected by the industry, supporters of Senate Bill 295 said Tuesday during a Senate Taxation Committee Hearing.
The measure would abolish a so-called tax holiday for the industry, increasing the current gas and oil tax. It is designed to provide local governments with financial support, while setting up a renewable energy fund, the supporters said.
Bill sponsor Sen. Christine Kaufmann said the extra tax revenue would bolster community infrastructure, schools and public services.
The Helena Democrat said the bill wouldn’t affect energy companies’ decisions to drill in Montana because other states don’t have a tax incentive like Montana’s.
“It’s time to bring the corporations home from holiday and provide Montana with the opportunity to invest in the needs of its communities,” Kaufmann said.
But opponents of the bill argue Montana’s oil and gas production pales in comparison to neighboring states like Wyoming and North Dakota.
They said the tax break is a necessary incentive for many companies to drill in Montana. The tax holiday was enacted years ago in in order to attract more energy companies to Montana.
The oil and gas companies provide the state with jobs and have turned dying towns into flourishing economies, opponents said. They argue that the industry has paid the state and local communities over $2 billion in taxes and an increase in oil and gas taxation would only hurt Montana’s economy.
Montana Association of Oil, Gas and Coal Counties spokesperson Bill Gilbert vehemently opposed the bill. The bill is designed to slow down or stop the oil industry in the state — an industry that is crucial to Montana’s economy, Gilbert argued.
“We need to encourage natural resource development in the state of Montana, not discourage it,” Gilbert said.
Senate bill 295 would end a .76 percent tax break on all oil and gas production, and would increase taxation on horizontal wells for the first 18 months of drilling to the standard oil production tax rate of 9.26 percent.
The bill’s supporters said the first 18 months of drilling are the most productive and lucrative for the company. They claim that Montana is missing out on those first 18 months of taxation, and that revenue is vital to address urgent problems that are partially the result of the industry’s presence in the communities.
The committee didn’t take immediate action on the bill.