Maybe the Mayans Were Right, the World Is Ending Soon ...

Prominent Arkansas Republican, two-time gubernatorial candidate, and former gas company executive Sheffield Nelson would like to increase his state's natural gas drilling tax.

Arkansas currently levies a 5% natural gas extraction tax, but it offers a discounted rate of 1.5% for the first three years (when about 40% of a well’s production takes place). On top of that, the state also allows a number of deductions in determining the taxable amount. Both of these “allowances” cut into collections pretty severely.

Citing these loopholes, Nelson is proposing a 7% flat rate, with no exemptions. He says the current tax does not fairly compensate Arkansas for the gas being extracted.

According to Pennsylvania's natural gas industry, Arkansas' tax structure was just this side of Eden and should be copied by the Keystone State.  Now we know why:

"Nelson argued that during the last 12 months, the severance tax in
Arkansas had brought in about $54 million to state coffers, but had a 7%
rate been in effect with no loopholes, the state would have netted
$250.1 million."

That is from Talk Business Net. Arkansas-based The City Wire also has details on Nelson's effort.

Lesson of the day: if you are going to enact a natural gas drilling tax (which polls very well with Pennsylvanians), don't fill it with loopholes.


0 comments posted

Post new comment

Comment Policy:

Thank you for joining the conversation. Comments are limited to 1,500 characters and are subject to approval and moderation. We reserve the right to remove comments that:

  • are injurious, defamatory, profane, off-topic or inappropriate;
  • contain personal attacks or racist, sexist, homophobic, or other slurs;
  • solicit and/or advertise for personal blogs and websites or to sell products or services;
  • may infringe the copyright or intellectual property rights of others or other applicable laws or regulations; or
  • are otherwise inconsistent with the goals of this blog.

Posted comments do not necessarily represent the views of the Keystone Research Center or Pennsylvania Budget and Policy Center and do not constitute official endorsement by either organization. Please note that comments will be approved during the Keystone Research Center's business hours.

If you have questions, please contact [email protected]

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd> <p> <img>
  • Lines and paragraphs break automatically.