severance tax fixed questionmark

severance tax fixed questionmark - Colorado Economy...

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Colorado Economy Anthony Milne Severance Tax 800628757 September 13 th 2007 When examining the state of Colorado’s severance tax, many different issues arise that relate to possible changes in its structure and general function. Recently, the issue of the Colorado severance tax has become a growing subject of debate and concern among taxpayers and government officials alike. The tax is imposed upon nonrenewable natural resources that are removed from the earth. Specifically, to the income from gross oil, both crude and condensate, as well as natural gases like coal bed methane and carbon dioxide. This tax is essentially meant to compensate present and future citizens for the loss of irreplaceable resources that add to a state’s natural wealth and as the revenues of this tax have greatly increased over recent years so has the controversies surrounding it. Questions surrounding Colorado’s severance tax can be separated into two main concerns, one being the basic notion of a new tax and/or tax structure imposed on the basis of increased revenues and efficiency, while the other issues are related to revenue distribution concerns. Both of these angles shine a light on the possibility of a new severance tax or altering the structures of that in place. This paper will serve to examine the different concerns related to Colorado severance tax and their possible solutions while attempting to make a case for changes to the collection and revenue distribution structure of the current tax. One major issue that must be considered when examining the Colorado severance tax is the distribution of its revenues. The tax revenue collected from the income of oil and gas produced in Colorado is supposed to be used to reimburse local governments for purposes such as fixing damaged roads caused from the drilling trucks, helping build new
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schools overwhelmed by the arrival of industry workers and their families, or to expand city sewer systems and other public related projects. 1 The State Severance Tax Statute 39-29-101 explains this idea as follows: It additionally is the intent of the general assembly that a portion of the revenues derived from such a severance tax be used by the state for public purposes, that a portion be held by the state in a perpetual trust fund, and that a portion be made available to local governments to offset the impact created by nonrenewable resource development.2 The present argument in regards to this matter is that the tax revenues are not being distributed in a way that governments and public entities are being fully reimbursed for the cost of natural resource harvesting impacts. In recent presentations to Colorado Legislative Council's "Interim Committee to Study the Allocation of Severance Tax and Federal Mineral Lease Revenue", county commissioners, mayors, school administrators, housing authority members, road and bridge supervisors, human service workers, and private citizens from all areas of Colorado made unanimous arguments that the tax
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This note was uploaded on 03/05/2008 for the course ECON 4999 taught by Professor Barry,poulson during the Fall '07 term at Colorado.

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severance tax fixed questionmark - Colorado Economy...

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