A Citizen’s Guide

The Department of Revenue earlier this week released a comparison of the governor’s oil tax bill and the version rolled out by House Resources earlier this month. It was the department’s second report this week regarding the governor’s tax plan.

The latest report shows only a slight difference between the two versions at $40 a barrel. But the report shows that revenue to the state nearly doubles under the House version when prices hit $60 a barrel.

That’s because the House added a provision to capture more revenue when prices peak. The provision adds 3 percentage points to the base tax rate when prices go over $50 a barrel, and the rate increases by another 3 percentage points for each additional $10 increase in price.

The Senate Resources Committee added a similar provision in its version of the bill.

At $60 a barrel oil, the House bill would bring in $1.3 billion to the state treasury, compared to $720 million under the governor’s proposal, according to production forecasts for 2007 by the Department of Revenue.

Robynn Wilson of the state tax division, who helped prepare the comparison, said in an interview Wednesday that while the incremental increase means more money to the state, it could backfire by discouraging additional investment and exploration.

Wilson said the governor’s bill encouraged investment by balancing the 20 percent tax rate with a $73 million standard deduction and a transitional provision that allows companies to regain investments made since 2001.

While the House left the base tax rate at 20 percent, it reduced the standard deduction by about $13 million and cut the transitional tax credit to three months. Wilson said the administration would like to see both those incentives restored.

Staff writer R.A. Dillon can be reached at (907) 463-4893 or rdillon.