House Speaker Charles McCall said today he was pleased the House of Representatives voted to increase the gross production tax rate on over 6,600 oil and gas wells, providing much needed funding to help fill the budget hole and increase teacher pay.
"With today's vote, the House of Representatives has increased the effective gross production tax rate by two percentage points in less than two years, providing over $400 million in new revenue for the state," said Speaker McCall, R-Atoka. "This latest measure increases the gross production tax rate from 4 percent to 7 percent on over 6,600 additional wells, providing us with $50 million this fiscal year alone. That's money we will use to fill the budget hole right away so we can act responsibly to prevent devastating cuts to our health care and mental health services."
McCall said the measure would result in $100 million in new revenue for next fiscal year, which can be used to fund the first $1,000 of the House Republicans’ “1-2-3”, $6,000 phased-in teacher pay raise plan.
McCall encouraged the Senate to act quickly to approve this measure along with the bills appropriating money from carryover and Rainy Day funds to health agencies that passed the House on Monday.
Some Quick Facts on the Gross Production Tax
If House Bill 1085X is approved by the Senate and Governor, the effective GPT rate will have been increased by 2 full percentage points since 2016, yielding $412.5 million in new revenue.
o November 2017: HB1085X moves all 4 percent legacy wells to 7 percent, yielding $50M in FY’18 and $100.5M in FY’19
o May 2017: The Legislature ended all Gross Production Tax rebates, yielding $46.3 million
o May 2017: The Legislature moved 1 percent legacy wells to 4 percent, yielding $95 million
o 2016: The Legislature placed a cap on the economically at-risk well rebate, yielding $120 million
o In 2016, Oklahoma’s effective gross production tax rate was 3.2 percent. Increasing the rate again on roughly 6,642 legacy wells changes the effective gross production tax rate to 5.3 percent, according to the Oklahoma Tax Commission. (NOTE: An effective GPT rate of 5.3 percent is well above the regional average)