May 14, 2014
InterAlia: [Advocates for raising Oklahoma’s gross production tax from the current 1 percent rate to 7 percent on horizontal and deep-well drilling for oil and natural gas have made questionable claims about the nature of the tax, the effects of energy drilling on Oklahoma’s economy, and the relationship between taxes on drilling and funding state government. This is one in a series of posts in which we present the facts]
Myth: Oklahomans “overwhelmingly” wish to raise taxes on oil and natural gas drilling within the state.
Facts: In a statewide survey conducted March 26-31, 2014, by an Oklahoma-based market research firm, a full 64 percent of Oklahoma voters said they would prefer to keep the state’s gross production tax on horizontal and deep wells at the current rate of 1 percent, as opposed to raising it to 7 percent. When voters were presented with the possibility that jobs and drilling activity could leave Oklahoma should the tax rate increase to 7 percent, support rose for keeping the tax low, with up to 74 percent of respondents wishing to leave the gross production tax rate at 1 percent, rather than increase it.
Other recent surveys of Oklahoma voters have produced dramatically different results. But it’s worth noting that those surveys were conducted by Global Strategy Group, the New York City polling firm that has also worked to support the Obama administration’s efforts to prevent completion of the Keystone XL Pipeline.
Truthfully, the Global Strategy Group survey was little more than a push poll, inaccurately suggesting, as they have before, that higher taxes would result in greater funding for core state services, such as schools, prisons, and roads.
In contrast, the facts suggest previous tax rate reductions in Oklahoma have contributed to our state’s government spending reaching all-time highs every year for a decade, and to our state’s tax collections reaching all-time highs the past two years, and likely a third. All during these record-setting years, Oklahoma’s gross production tax rate on horizontal and deep-well drilling for oil and natural gas remained at a steady, low effective rate of 1 percent.
It is becoming harder and harder for policymakers to ignore the fact that tax rates, particularly taxes on work and production, have an impact on economic development, job growth, and the ability of state governments to fund the services taxpayers want.
Jonathan Small, CPA, is OCPA’s vice president for policy. Dave Bond is CEO of OCPA Impact, Inc., an Oklahoma-focused, nonpartisan issue advocacy organization.