It is tempting to view the oil industry as the goose who laid the golden egg. Legislators should recognize its contributions and give certainty to an industry that provides for the well-being of the state and its citizens.
When North Dakota legislators propose to increase the oil extraction tax, one can wonder why they are looking to gamble with state revenues by penalizing the industry that has brought unprecedented growth and prosperity to our state. North Dakota already has one of the highest effective severance tax rates in the country. It’s irresponsible that any policymaker would attempt to squeeze more from the industry and risk discouraging future investment. Short-sighted at best, reckless at worst!
The state has collected over $18 billion in oil and gas production and extraction taxes since 2008. These revenues have been used to fund infrastructure, education and other initiatives across the entire state. Oil and gas tax revenues also accounted for more than 50 percent of total state tax revenues over the last five years. It is vital that the Legislature and the public understand the massive contribution already being made by the industry before they think they need more.
In 2015, when the price of oil was decreasing, the Legislature reduced the tax rate and eliminated the “trigger” that would have temporarily stopped the oil extraction tax, saving the state almost $950 million in lost revenue. The oil industry also would have slowed investment and lost revenue. Policymakers must be mindful of the fact that, while the Bakken is a tremendous resource, there are other shale plays where investment goes further.
Sen. Merrill Piepkorn, D-Fargo, and Rep. Pamela Anderson, D-Fargo, can’t have it both ways. They can’t bemoan an imaginary reduction in revenues from the legislation passed in 2015 and now argue for a higher tax rate that could stifle growth and investment. Government should keep tax rates fair and consistent to encourage economic growth and investment in the natural resource our state relies on.