The Policy Institute, based in Helena, Montana, blends authoritative research and hands-on political engagement to create public policy based on economic justice, fair taxation, corporate accountability and environmental responsibility.

2009 Legislative Priority: Oil and Gas Tax Holiday Repeal

During the 2009 legislature, The Policy Institute worked to repeal the oil and gas tax holiday, which has cost the state of Montana more than a half a billion dollars since 2003.

The oil and gas tax holiday was originally enacted as an incentive to spur production during sagging oil markets. Defenders of the tax breaks say that tax rates are major factors in exploration and development decisions and that incentives are needed to attract business and create jobs.

The Policy Institute finds no evidence to support that argument, but a study from the University of Wyoming concludes that tax incentives are not significant determinants of oil and gas production and that the “overall story (in reducing severance tax rates) is one of a substantial net loss in tax revenue.”

Our stance is that if it’s right for Montana to help the oil and gas industry when prices are low, then it’s right for the industry to help Montana when prices are high. It’s up to the Legislature to revise the current tax system and restore a balance.

During the 2009 session, Senator Christine Kaufmann introduced SB 258 that would have eliminated the holiday when oil and gas prices hit a certain level. The bill died in the Senate Tax Committee.

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