California is the Only Top Ten Producing State Without a Tax
Texas Taxes = $14.33/barrel; California only gets $4.22/barrel
May 17,2010 (Sacramento) – Last week, as Governor Arnold Schwarzenegger released an updated California Budget with massive cuts in services, Assemblymember Pedro Nava (D-Santa Barbara) called on the Governor to support his Assembly Bill 1604, the Oil Industry Fair Share Act. The bill would create an 10 percent oil severance tax on each barrel of oil produced in California and generate over $1.5 billion in revenues to fund public safety, education, human services, and other vital programs.
“At a time when classrooms are becoming more crowded, when more and more people are losing their health insurance due to unemployment, and numerous programs affecting seniors, and the disabled are facing increased cuts, we cannot allow the oil industry to get a free ride in California,” said Nava, who is also a candidate for Attorney General. “These resources belong to the people of California and therefore should be used for the benefit of all our hardworking families.”
California is the only top ten oil producing state in the country without an oil severance tax. According to an analysis by the Board of Equalization, California taxes oil at 1/3 the rate of Texas. Texas’ taxes amount to approximately $14.33/barrel of oil, and in California the taxes amount to roughly $4.22/barrel. Sarah Palin’s Alaska charges 25% tax on each barrel of oil extracted.
Nava continued, “Oil producing states such as Alaska and Texas charge this tax, why not California? It is time that the people of California stand-up and say ‘Enough is enough! You cannot exploit our resources for free.’”
Previous efforts to add an oil severance tax have been killed in committee. Republican leaders have argued that raising taxes on oil companies could cause them to leave the state, costing jobs for Californians. The California Chamber of Commerce has also opposed oil severance tax measures, arguing that such measures unfairly single out a specific industry for taxation.
Many organizations are supporting Nava’s Oil Industry Fair Share Act, including the Congress of California Seniors, the California Nurses Association, the California Teachers Association, the California Federation of Teachers, the California School Employees Association, and Environment California. Some recent vocal support for the measure is highlighted below:
“Seniors have borne the brunt of these draconian budget cuts; we have seen a reduction in adult day health care programs that allow seniors to stay in their homes, the elimination of Alzheimer’s research, and aid to low income seniors has been slashed,” said Gary Passmore of the Congress of California Seniors. “The Fair Share Act will bring much needed revenues to support these essential programs.”
“With $18 billion in cuts to education, this could be an important source of revenue to save important services for our students,” said Jai Sookprasert the tax policy analyst for the California School Employees Association.
“Recent budget cuts are harming nurses’ ability to provide for the critical health needs of people in our state,” said Elizabeth Pataki, RN of the California Nurses Association. “An oil severance tax could provide much needed revenue to help pay for Californians’ healthcare needs.”
“The last round of budget cuts has affected every Californian,” said Willie Pelote of the American Federation of State, County, and Municipal Employees. “We are dismantling programs and need to ensure that sufficient revenue is available to mitigate the State’s fiscal crisis.”