Sheffield Nelson scores on severance tax argument | Arkansas Blog

Monday, September 26, 2011

Sheffield Nelson scores on severance tax argument

Posted By on Mon, Sep 26, 2011 at 7:11 AM

Here's a suggestion for Sheffield Nelson, the former gas company executive who's been born again as a tax-and-spend crusader. Get a website up for the Committee for a Fair Severance Tax.

Then he can post for ready and free inspection by the world the op-ed he contributed today to the Arkansas Democrat-Gazette on the need for an increase in the state's pitifully low gas severance tax. The gas companies wool the number all around, but the big numbers tell the story — $3.6 billion in gas sales and $54.6 million in severance taxes, or a rate of 1.5 percent.

Nelson wants tax natural gas producers in Arkansas to pay a reasonable amount for the damage they do to roads and environment while extracting billions in non-renewable resources from Arkansas, mostly for sale in other states at relatively bargain rates thanks to our tax, fourth lowest among the 30 producting states. He wants to raise the rate to 7 percent.

Randy Zook of the State Chamber of Commerce made the traditional argument against an increase. It will kill the goose yadda yadda. It hasn't killed it in neighboring states with much higher tax rates. He skips over the amount being paid by taxpayers statewide to offset the cost of what are mostly localized economic benefits. As even he notes, the drilling hasn't corrected the high unemployment rates in the shale gas zones.

The Chamber loves to increase the sales tax on poor people in Arkansas to pay for road damage or whatever else the need of the moment is. But make industry pay for the damage IT causes? Not now, not ever. Certainly not as long as those industries pay big bucks to the chamber to lobby for their higher profits. The Little Rock Regional Chamber of Commerce, which recently pumped a sales tax increase in Little Rock and is sure to back the sales tax for highway construction, can be expected to chime in any moment now to protect the fattened geese of the gas industry. I wish Zook, who mentions corporate income taxes, would spearhead a study reporting on corporate income taxes paid in Arkansas by national and multinational corporations so we could see how the state's favorable accounting scheme affects them.

Gimme one of those petitions to sign, Sheffield.

PS — Nelson called. He said signature-gathering is well underway. The Arkansas Municipal League is adding its muscle to the push. Which would you rather do? Vote for a sales tax to fix highways or vote for a severance tax on gas passed along, if at all, to customers in other states?

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