I agree with Gov. Riley who says the state’s current system of taxing natural gas pumped offshore by ExxonMobil and other companies is “broken and swindling Alabamians of their rightful tax collections.” The Governor is also correct that the actions of the companies are “unconscionable.” The people of Alabama are being fleeced by the powerful oil companies and that must be stopped. In an effort to correct things, Gov. Riley has called on lawmakers to pass a proposed law that he says would fix the tax-collection system. The bill, if passed, would double the tax that companies now pay on the natural gas they pump from offshore. The increase would be from about $40 million a year to about $80 million a year. Doing nothing could mean that ExxonMobil and other companies, by deducting overhead costs of production as allowed in a recent ruling by an administrative law judge, could pump natural gas in state waters and in effect pay Alabama nothing in severance taxes on the gas.
The administrative law judge’s ruling, made in September, could force Alabama to pay more than $100 million in tax refunds to ExxonMobil and other companies that pump gas from offshore. Gov. Riley, in support of his plan, observed:
It’s not only that they want the State of Alabama to repay what they’ve already paid us. They want a system that allows them to deduct indirect costs down to the point that they would never have to pay any severance tax going forward.
Gov. Riley has hit the nail squarely on the head in his remarks on the inequitable system that favors the oil companies that are drilling in Mobile Bay. Hopefully, the legislators will pass this bill in short order. But, without any doubt, it will be opposed by the cadre of well-paid and influential lobbyists for the powerful oil companies. If you agree that we deserve fairness and that the companies should pay, contact your Senators and House members and ask them to help pass this badly needed legislation.
Source: Birmingham News
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