Oklahoma Farm Bureau applauds the Oklahoma legislature for passing HB 2562 Thursday, which reduces an approaching gross production tax rate increase on horizontal wells and also applies an equal rate to traditional vertical wells. Under the new law, horizontal wells will be subject to a tax incentive program to reduce the effective gross production rate to 2 percent for the first 36 months of production and then increase to 7 percent. The same law will be applied to vertical wells, which are currently taxed at 7 percent.
The bill replaces an expiring incentive program and prevents the gross production tax rate from automatically increasing to the actual rate of 7 percent in 2015.
“While we are always concerned about raising taxes on landowners, we view this bill as a strong compromise for our members who own mineral rights and the oil and gas companies who provide jobs and revenue in our rural communities,” OKFB President Tom Buchanan said. “We would like to thank the legislature for taking action before royalty owners and the state’s energy industry were negatively impacted next year.”
In another effort to protect the rights of Oklahoma landowners, OKFB opposed HJR 1092, which was defeated 34-61 by the House Thursday. The bill would have increased Oklahoma ad valorem taxes to build storm shelters in schools.
“Farm Bureau fully supports the construction of shelters to protect students and appreciates Rep. Mark McBride and Rep. Jon Echols’ efforts to raise private dollars through the Shelter Oklahoma Schools foundation,” Buchanan said. “Our state’s agricultural producers are major landowners in their communities and would unfairly bear the brunt of this ad valorem tax increase.
“Many producers are already making difficult management decisions due to the severe drought conditions. We would like to thank the Oklahoma legislature for understanding the potential undue burden this bill could have placed on farmers and ranchers.”
Editor’s Note – HJR 1092 was originally defeated 34-61 by the House Thursday. The bill was reconsidered late Thursday evening and passed with 51 votes. HJR 1092 is expected to be heard in the state Senate on Friday, May 23. We will continue to update this information as this story develops.
