Louisiana House Bill HB30

Louisiana 2021 Regular Session

• Introduced: 2/25/21
• Refer: 2/25/21
• Refer: 4/12/21

Caption

Reduces the severance tax rate for oil over a certain period of time and fixes the severance tax rate for oil produced from certain wells at the current rate (OR DECREASE GF RV See Note)

Impact

The bill creates a significant impact on state laws governing severance taxation. By reducing the tax obligations on oil severed from production sites, the state aims to remain competitive within the energy industry, particularly for operations that may otherwise be less economically viable. Additionally, the renewed structure will fix the severance tax rate for oil produced from certain incapable and stripper wells, providing further assurance to producers operating under these classifications that their tax burdens will remain constant and manageable.

Summary

House Bill 30 aims to reduce the severance tax rate on oil production in Louisiana over an eight-year period. Currently, the severance tax rate is set at 12.5% of the oil's value at the time and place of severance. Under this proposed legislation, the severance tax rate will gradually decrease to 8.5%, providing various incremental reductions each year until the final value is reached after 2029. This change is intended to incentivize oil production in the state and potentially stimulate economic growth within the oil sector.

Sentiment

The sentiment surrounding HB 30 is largely supportive among stakeholders in the oil industry who view the tax reductions as vital for encouraging production and investment. However, there may be concerns from fiscal watchdogs or public interest groups that worry about the long-term revenue impacts of reducing severance taxes, which could affect state funding for public services. Thus, while proponents celebrate the potential economic benefits, there are underlying tensions regarding state revenue stability.

Contention

One notable point of contention is the potential impact of reduced severance tax revenue on public funding. Critics may argue that while the bill supports the oil and gas sector, it may come at a cost to other critical areas that rely on the state's revenue derived from severance taxes. Additionally, there are discussions about how such tax reductions might influence environmental policies and the state's commitment to sustainable practices in oil extraction and production.