Mining and Oil Lobbyists Extracting Major Benefits from States



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We've noted before that lobbyists for extractive industries extract billions of dollars out of taxpayer pockets through special tax loopholes and subsidies at the federal level. Unfortunately, this is true at the state level as well. Even when states face unprecedented budget shortfalls and are considering harsh spending cuts, petroleum and mining lobbyists are working hard to preserve and expand their tax subsidies.

One particularly egregious example is Nevada's Barrick and Newmont mining companies, which produce 90 percent of the gold in Nevada, worth over $500 million dollars. Recently, neither company reported any taxable income from their mines.

Interestingly, a Nevada State Tax Director recently admitted that the state has not even audited the industry for at least two years — and then entered into an ‘abrupt’ retirement.

Some legislators are proposing to limit tax deductions for mines to raise hundreds of millions of dollars. But Governor Brian Sandoval opposes the measure and it looks like proponents will not be able to overcome his veto.

In Alaska, oil industry lobbyists have found a friend in Republican Governor Sean Parnell, who is seeking to cut oil taxes and increase subsidies by at least $1.8 billion a year.

Governor Parnell says this will spur "investment" in the state. But the whole point of the tax is to ensure that oil profits result in investment in the state. As Democratic State Senator Bill Wielechowski explains, without the oil taxes, companies would take the billions in profits produced in Alaska and invest them in places like Venezuela or Ecuador. 

The new oil tax cuts do not come as a surprise to Democratic State Representative Les Gara, who contends that petroleum company representatives played a direct role in crafting the Governor’s legislation.

North Dakota seemed to have resisted extraction lobbyists when the State House rejected a measure strongly promoted by the energy industry. The state's current oil extraction tax is automatically reduced when the price of oil falls below $50 a barrel. The proposed measure would scrap that rule and instead reduce the tax as production increases.

Republican Majority Leader Al Carlson tried to ressurect the measure by sneaking the language into another oil bill without a proper hearing.

The Grand Forks Herald editorialized that the legislature must study the effect of the measure through a “neutral source” rather than relying on the “self-interested arguments from the oil industry.” Fortunately, the measure is being held up in the Senate, which will likely guarantee that the public will get to review the changes the energy industry is proposing.

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