Louisiana House Bill HCR7

Louisiana 2016 1st Special Session

• Introduced: 2/22/16

Caption

Suspends the modifications of the severance tax exemptions on oil and natural gas as enacted in Act No. 120 of the 2015 R.S. from March 1, 2016, until sixty days following adjournment of the 2016 R.S.

Impact

The decision to suspend the special tax treatment directly impacts the financial landscape for oil and gas producers in Louisiana. Supporters of the suspension argue that the financial state of Louisiana necessitates the suspension to bolster state revenue, which is essential in avoiding cuts to vital public services. By revoking the exemptions for oil and gas, the state hopes to increase its tax income, while also responding to current fiscal pressures. However, this action may lead to increased operational costs for companies in the energy sector, potentially affecting their investments and employment levels in the state.

Summary

House Concurrent Resolution 7 (HCR7) aims to suspend the modifications of severance tax exemptions on oil and natural gas that were enacted in Act No. 120 of the 2015 Regular Session. This suspension is intended to remain in effect from March 1, 2016, until sixty days following the adjournment of the 2016 Regular Session of the Legislature of Louisiana. The bill reflects the state’s attempts to navigate its financial challenges by temporarily altering tax relief measures aimed at the oil and gas sector, acknowledging that revenue generated from these sources is critical to maintaining essential services for citizens.

Sentiment

The overall sentiment towards HCR7 appears to be mixed, with support primarily from legislators concerned with the state’s fiscal health and the need for increased revenue. Proponents believe that the suspension is a necessary step to ensure financial stability. Conversely, there are concerns from industry stakeholders about the potential negative implications for the oil and gas industry, particularly regarding how such suspensions might deter investment. Those against the resolution highlight the risk of compromising the competitive position of Louisiana's oil and gas sector during already turbulent economic times.

Contention

One notable point of contention surrounding HCR7 is the balance between fiscal responsibility and maintaining a favorable business environment for the oil and gas sector. Critics argue that suspending tax exemptions may not only place an undue burden on the industry but could also lead to job losses and reduced economic activity. The broader debate reflects ongoing tensions between the need for immediate fiscal solutions and the long-term sustainability of Louisiana's economic engine.