Cook introduces bill to re-structure oil tax
Senator Dwight Cook, R-Mandan, introduced a bill on Monday that would re-structure the tax rates for oil extraction in North Dakota. If passed, the new tax structure would bring certainty and stability along with long term viability to the industry in North Dakota.
Cook’s bill will require oil filed operators to withhold state income taxes from most royalty owners, tax new wells on stripper well property at the full state oil tax rate, provide an incentive to drill outside the Three Forks and Bakken oil fields, and create a flat extraction tax which will eliminate the low price triggers contained in the current tax formula in exchange for a lower extraction tax rate for wells drilled after January 1, 2017.
“North Dakota has 10 various triggers and incentives that affect the revenue the state receives and the taxes producers pay,” says Cook. “This bill not only ensures the state receives income tax from out of state royalty holders, it also protects the state from a potential $2 billion revenue decrease if the world price drops dramatically like it did in 2009.”
“There is no question that North Dakota faces growing competition for oil exploration in North America, said North Dakota House Majority Leader Al Carlson. “The technologies developed here are being used around the world to increase oil production. Not only will we encourage long term development with a more competitive future tax rate, we also create incentives to explore beyond the Bakken and Three Forks. This bill will help ensure North Dakota remains competitive long into the future and we have the revenues to fund our priorities, reduce the tax burden on our citizens and save for the future.
The fiscal impact of this bill in the 2012-2015 biennium is projected to be more than $28 million.