Report: Energy Firms Paid Out Fewer Taxes in '08

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    NEWSLETTERS

    TK
    KXAS
    Under Texas' current state business tax, oil and gas producers got a $78 million tax break last year.

    Under Texas' current state business tax, oil and gas producers got a $78 million tax break last year -- when the industry was awash in record profits -- compared to 2007 figures, according to a preliminary report from the state.

    Energy firms paid out $411 million in 2008, down from nearly $489 million in 2007. The industry also separately pays state levies including severance taxes, which skyrocketed with 2008's higher oil prices, according to the Business Tax Advisory Committee's report. A draft of the committee's report to the Legislature is scheduled to be released soon.

    The Legislature passed the restructured business tax in 2006 to replace the previous loophole-ridden franchise tax.

    While the energy industry got a break, other industries did not. In fact, most other industries shelled out more last year than in 2007, according to the preliminary report.

    But spokesmen for the state's leading oil and gas industry trade group disputed the notion that the industry had gotten a tax break, saying that other taxes paid last year increased due to record-high gasoline prices.

    "Texas remains very dependent on oil and gas to pay the bills," said Ben Sebree with the Texas Oil & Gas Association. He said the industry supported the tax rewrite because it thought the tax should be broadened to cover businesses other than those that are capital intensive.

    Sebree said he expects the industry's business tax payments will go "way up" this year based on 2008's revenues. Each year's tax tab is based on the previous year's business activity.

    One of the critics of the two-year-old tax, Dale Craymer, chief economist of the Texas Taxpayers and Research Association, said the purpose of the reform overall wasn't to help the oil and gas industry as much as it was to try to make the tax more reflect a modern economy.

    "All of that is consistent with the stated goal of trying to move the tax base away from goods-producing industries and more toward services," said Craymer in an online story Wednesday for the Houston Chronicle.

    Since profit is not considered in the state business tax, Craymer noted that the flip side for oil and gas producers is that they will likely end up paying more in unprofitable years than under the old tax.