New Tax on Oil Companies

Navtej Kohli very surprised after major fall in the Oil prices and want to recover the market as soon as possible . Navtej Kohli just noticed a new tax on oil companies and want to discuss it.

Now in the market having buzz to take Gov. Brian Schweitzer bill which want increase taxes on Oil Companies when the Oil market now facing low oil prices. So what be reason behind while if we go sometime back , government had given many assumption and tax benefits to oil industry and the price of Oil in world market going higher and higher .But the debate now start that what be impact of tax increment . Proposed taxes plan is $1 for every barrel of oil drilling in Montana and 8 cents for every 1000 cubic feet of natural gas product .The income of these taxes will be spend on teaches salaries. Many News paper remarked this as “Energy for Education” or “E-Squared,” and it is sponsored by by Rep. Kendall Van Dyk, D-Billings, and got a primetime endorsement from Schweitzer during his State of the State address earlier this year.

While addressing Schweitzer told that its not a tax hike but a partial repeal of tax holidays of oil producers which are running since 1999 and it will helpful to increasing the salary of teachers of Montana.

>There was storm of questionnaires had started after this speech moreover republicans leader also blaming that such move can drove away oil and gas companies form Montana. Senate President Bob Story, R-Park City, argued and suggest that better option for increasing teachers salary to increase oil drilling not tax. Also many businesses personalities comes up with many ideas to replace such tax hike.

Patrick Montalban of the Northern Montana Oil and Gas Association. Told to media
“We do need to pay our teachers more, but you don’t put it all on one industry. That’s bad tax policy,”. Also he quoted that such tax might be higher then all taxes since before which may turns into job cutting into oil industries and many people will became joblessJohnny Brumley of Texas oil company Encore said the bill would send the wrong message to oil producers.

“Producers will be afraid to invest in your state because you’ll be seen as changing the rules,” he said.

But proponents of the bill said oil companies are not as sensitive to taxes as the opponents suggested.

“When you hear in a few minutes that oil and gas taxation is a significant factor in the development of oil and gas resources or the sustaining of the oil and gas industry, I urge you to think critically about that statement,” said Robert Decker of the Policy Institute. “If you question that, you’ll find that there’s lots of evidence it is not true.”

One such study comes from Bozeman’s Headwaters Economics. A study it released in October 2008 suggests that oil and gas companies are far more influenced by factors like access to oil reserves and market price than by tax rates.