Texas Senate Bill SB127

Texas 2021 - 87th Regular

Caption

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

Impact

The implications of SB127 are significant, as it modifies existing tax obligations for entities engaged in high-cost gas extraction. The legislation maintains that any tax liabilities accrued before the enactment of this Act will remain unchanged, thus ensuring a degree of stability for past practices. However, for future operations, the bill introduces a potentially challenging environment for gas producers who may struggle to meet the specified deadlines for certification and application. The anticipated outcome is a shift in tax liability that could affect operational costs and investment strategies within the industry.

Summary

Senate Bill 127 proposes the phasing out of tax reductions for certain high-cost gas. Specifically, it amends Section 201.057(f) of the Texas Tax Code, setting stricter deadlines for the application process for tax reductions related to high-cost gas production. This bill is designed to adjust the state's fiscal approach to taxation within the energy sector, specifically targeting the profitability and reporting practices of gas producers. Under the proposed legislation, the timeline for applications to obtain these tax reductions has become more streamlined but also carries repercussions for late submissions, which will incur a reduction in the potential tax benefit.

Contention

While the bill appears to streamline processes from a regulatory vantage point, there is potential for contention among stakeholders in the energy sector. Companies producing high-cost gas may oppose the changes, arguing that the phasing out of tax reductions could lead to increased operating costs and impact their bottom line. On the other hand, proponents of SB127 may argue that the changes facilitate better financial accountability within the industry and ensure that only eligible producers benefit from tax reductions. The effectiveness of this legislation will likely depend on the ongoing dialogue between legislators and industry representatives as they navigate these changes.