Studies say ending Colo tax break won’t hurt
Vail, CO Colorado
DENVER, Colorado ” Ending a 30-year-old tax break for oil and gas companies would have little impact on gasoline prices and home heating bills, according to a report Thursday from a nonprofit group that promotes conservation.
The report by economist Joe Marlow of the Tucson, Ariz., based Sonoran Institute disputes radio ads being run by the oil and gas industry, which opposes a proposed initiative for the November ballot that would end the tax credit.
Colorado’s production is minuscule and eliminating the tax incentive would have little or no impact on oil and natural gas prices, the report found.
“The factors that drive gas and home heating prices are not local. Contrary to industry claims, if Colorado voters decide to end the tax break for the oil and gas industry, it would not raise prices locally or anywhere else,” Marlow said.
The ballot initiative would ask voters to end a deduction for the oil and gas industry that allows producers to take a credit of up to 87.5 percent of the prior year’s property tax liability from their severance taxes. Gov. Bill Ritter supports the initiative and says it would provide the state with more than $200 million a year. New revenues would go to college scholarships, wildlife habitat protection, clean energy and community expenses associated with expanded drilling.
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Dan Hopkins, spokesman for Citizens for a Stable Economy, which opposes the initiative, said eliminating the credit would increase oil and gas prices because Colorado is only one of nine states with significant production. Hopkins said even if companies send that oil and gas to other states, consumers will pay.
Hopkins argued that the credit was given to companies because they pay local property taxes that fund schools, police and fire protection and road construction in the communities where they operate. Someone will have to pay for those services if companies cut back on production, he said.
“There is going to be some impact on consumers in Colorado,” Hopkins said.
A separate report by Mark Cooper, research director of the Consumer Federation of America, a consumer protection group, also concluded that ending the tax break would not affect Colorado consumers.
Cooper insisted that oil companies blame the global market when they want to justify high prices ” and then demand tax breaks, claiming even small increases in their cost of doing business will force them to raise prices.
“It’s simply absurd on its face,” he said.