House Kills Oil Tax Bill - KXNet.com - Bismarck/Minot/Williston/Dickinson-KXNEWS,ND

House Kills Oil Tax Bill

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Bismarck, ND -

The North Dakota House has killed a bill aimed at restructuring oil taxes.

Representatives defeated the bill 71-21.

The measure has been one of the most contentious of the legislative session.

It would have lowered tax rates for oil companies in exchange for closing the so-called stripper well loophole.

Lower producing wells are taxed at a lower rate, the "loophole" is that any other wells on that property share the reduced tax no matter how much they produce.

The state Tax Department says the loophole is costing the state $60 million a year in lost revenues.

Oil companies viewed the proposal as a tax increase.

To offset that, the bill sought to reduce the oil extraction tax by a half percent on new wells.

Still, many lawmakers say the oil industry doesn't need an incentive to drill in the Bakken.

Fargo Representative Scot Kelsh says, "extraction taxes stood the test of time in the last 32 years in North Dakota. It was the tax rate when the Bakken boom began and the industry is flourishing under that current tax rate. As the industry grows the need for infrastructure continues to grow."

"This does fix the stripper well situation, that is very important as we go forward. We can't go forward without negotiating something else with that," says Representative Jon Nelson of Rugby.

Representative Dave Drovdal of Arnegard says, "the oil industry has provided us with opportunities, a fair and balanced tax rate they can understand is good."

Most of the debate centered around giving the tribes more of the tax revenues.

The proposal increased their share from 20% to 50%.

However, many lawmakers were concerned that the tribes were not required to use the revenues to improve infrastructure.

Representative Mark Dosch of Bismarck says, "they are going to benefit hundreds of millions, I'm fine with that, but the Tribal governments are unwilling to commit to us that they will use this money to improve life for all those on the Reservation. That is a shame. For that reason, I will not support this legislation."

Attempts to close the stripper well exemption have failed in the past three legislative sessions

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