Texas Senate Bill SB1417

Texas 2019 - 86th Regular

Caption

Relating to phasing out the tax reduction for certain high-cost gas.

Impact

The implementation of SB1417 is likely to have significant implications for the oil and gas sector in Texas. By phasing out tax reductions, it may lead to increased financial burdens on operators of high-cost gas wells, potentially affecting their profitability. Critics of the bill raise concerns about the impact on smaller operators who rely on these tax incentives to remain competitive in a challenging market. The change aims to streamline tax assessments but also runs the risk of reducing investment in the high-cost gas sector.

Summary

Senate Bill 1417 seeks to phase out the tax reduction previously provided for certain high-cost gas production in Texas. The bill proposes amendments to Section 201.057(f) of the Texas Tax Code, which governs the qualifications for the tax reduction. As stipulated, the reduction will now be contingent upon the submission of an application to the comptroller and is subject to a strict deadline. Specifically, to qualify for maximum tax reduction benefits, operators must file certifications and reports that document their drilling and completion costs associated with high-cost gas wells.

Contention

The passage of SB1417 may provoke a debate among stakeholders in the energy industry. Proponents argue that the bill is necessary to ensure that tax reductions align with current market conditions, thereby fostering a more equitable taxation framework. Conversely, opponents express that eliminating these reductions could deter investment in the high-cost gas production, which is vital for maintaining regional economic stability. The bill was articulated to maintain existing tax liabilities accrued before its enactment, ensuring transitions remain standardized and legal compliance is upheld.