Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Severance Tax topic
No spam. Unsubscribe anytime.
Severance-tax auditing, cap removal and carbon-capture questions remain as institute weighs next steps
Summary
At the Louisiana Tax Institute meeting, Department of Revenue officials said the session left key severance-tax mechanics unchanged but added an audited-well-cost requirement for horizontal-well exemptions and removed a constitutional cap that limited local severance shares; lawmakers and officials also raised parity questions between oil and gas
Department of Revenue officials told the Louisiana Tax Institute that the recent session made limited changes to severance tax rates but created important administrative and constitutional changes that affect local shares and auditing of well costs.
Secretary Richard Nelson said the principal statutory change was a requirement that audited well-cost information be submitted to support the horizontal-well exemption; that change moves the exemption from a self-reported status toward an auditable one. Nelson said: “Previously that wasn't audited. And now, basically, the requirement is that it will be.”
Nelson and members discussed the constitutional change that removed the previous cap on local severance-tax distributions (the prior cap was about $1.2 million by example in the session). If the constitutional amendment passes, parishes now receiving severance tax shares that had been capped would receive the full local 20% split on severance collections, increasing local revenues in producing parishes.
Senators and members discussed parity between gas and oil taxation, noting volatility in gas revenues because of price swings and the horizontal-well exemption. Nelson cautioned that nominal statutory rates may not reflect effective rates because exemptions and the short payout times of some horizontally drilled wells can make gas collections volatile and can reduce average effective tax on production.
Members also raised emerging questions about taxation of carbon-capture activities; Nelson said states and localities are still working through royalty, fee and permit structures and that Louisiana has an injection fee and a royalty arrangement for state lands with a portion that may be shared with locals if projects proceed on state property.
Ending: The institute signaled it will review severance and carbon-capture issues further before the regular session and flagged parity and auditing as topics that may require legislative or administrative action.
