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SUPPORTING TEXAS: Taxes Paid by the Oil and Gas Industry October 2010 T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting.

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Presentation on theme: "SUPPORTING TEXAS: Taxes Paid by the Oil and Gas Industry October 2010 T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting."— Presentation transcript:

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2 SUPPORTING TEXAS: Taxes Paid by the Oil and Gas Industry October 2010 T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting

3 Business Share of Tax Burden All Industries, State Rankings T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting

4 Business Share of Tax Burden Average Cost Per Employee T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting

5 Business Share of Tax Burden Average Cost Per Employee T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting

6 Business Share of Tax Burden Average Cost Per Employee T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting

7 Oil & Gas Defined NAICS Codes, Direct Employment, Fiscal 2009 T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting

8 Oil & Gas Defined NAICS Codes, Direct Employment, Fiscal 2009 T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting

9 Industry Impact, Taxes and Wages T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting

10 Drilldown on Taxes – Oil & Gas Sectors T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting

11 Drilldown on Taxes – Oil & Gas Sectors T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting Property Tax: $3.3 billion Companies pay property tax on: Mineral producing properties – four to six × per mcf or barrel Pipelines Refineries and petrochemical plants Office buildings Everything else Companies pay property tax to: School districts Cities Counties Special districts – MUDs, hospital districts, junior college districts, et. al.

12 Drilldown on Taxes – Oil & Gas Sectors T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting Franchise Tax: $529 million Industry sectors: Oil & gas production Pipelines and natural gas distribution Refining and petrochemicals Machinery manufacturing Motor fuels wholesale distribution Franchise tax applies to: Corporations LPs, LLCs, and most liability-limited entities Combinations of the above Companies pay franchise tax to: State of Texas (no local component)

13 Drilldown on Taxes – Oil & Gas Sectors T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting Sales Tax: $1.3 billion Companies pay sales tax on: Drilling rigs and drill bits Pumps, valves, fittings Mud, fracturing fluids, measuring and control instruments Refinery repair and remodeling Non-manufacturing use of electricity, gas, telephone, computers Companies pay sales tax to: State of Texas Cities Counties Special districts – MTAs, library districts, et. al.

14 Drilldown on Taxes – Oil & Gas Sectors T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting Production, or severance taxes: $2.3 billion Gas: $1.4 billion Oil: $0.9 billion Companies pay severance tax of: 7.5% on conventional gas production Sliding scale (0%-7.5%) on high-cost gas production 4.6% on conventional oil production 2.3% on enhanced oil recovery production Additional 13/16 cents/barrel tax and fee on production Companies pay production tax to: State of Texas

15 Drilldown on Taxes – Oil & Gas Sectors T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting Production, or severance taxes: Rainy Day Fund Three-fourths of collections in excess of 1987 thresholds: Oil threshold: $533 million Gas threshold: $600 million In the current biennium, deposits anticipated: Oil: $520 million Gas threshold: $606 million At the end of the current biennium, Rainy Day Fund balance anticipated: $8.2 billion $8.2 billion

16 Drilldown on Taxes – Oil & Gas Sectors T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting Royalties to State Funds: $819 million Permanent School Fund – market value: roughly $20 billion Sec. 5. PERMANENT SCHOOL FUND; AVAILABLE SCHOOL FUND; USE OF FUNDS; DISTRIBUTION OF AVAILABLE SCHOOL FUND. (a) The permanent school fund consists of all land appropriated for public schools by this constitution or the other laws of this state, other properties belonging to the permanent school fund, and all revenue derived from the land or other properties. Amended Aug. 11, 1891 Permanent University Fund – market value: roughly $10 billion Sec. 11. PERMANENT UNIVERSITY FUND; INVESTMENT; ALTERNATE SECTIONS OF RAILROAD GRANT. In order to enable the Legislature to perform the duties set forth in the foregoing Section, it is hereby declared all lands and other property heretofore set apart and appropriated for the establishment and maintenance of the University of Texas…

17 Drilldown on Taxes – Oil & Gas Sectors T e x a s O i l & G a s A s s o c i a t i o n Tax & Fiscal Consulting Other Taxes Counted Oil and gas well servicing: $36 million Motor vehicle sales tax: $60 million Motor fuels tax (paid): $72 million Gas utility and gross receipts taxes: $81 million Other Taxes Not Counted Motor fuels tax collected and remitted: $3 billion Sales tax collected at retail stations Coastal protection (imported oil) fee: $16 million Drilling permit fees: $8 million Oil and gas cleanup regulatory fees: $7 million Air control fees Local franchise fees paid Anything else

18 SUPPORTING TEXAS: Taxes Paid by the Oil and Gas Industry October 2010 T e x a s O i l & G a s A s s o c i a t i o n Estimates provided by Tax & Fiscal Consulting


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