ND House Approves Change To Oil Tax

BISMARCK – North Dakota House lawmakers voted 76-15 Wednesday, Feb. 8, to charge a flat 10 percent tax on oil production regardless of the price of oil, a change that the Mandan, Hidatsa and Arikara Nation opposes.

House members approved House Bill 1166, which removes a so-called high-price trigger that would increase the state’s overall tax rate on oil to 11 percent if oil prices were sustained at high levels.

In 2017, the 11 percent tax rate would kick in if the price for West Texas Intermediate oil hit $85 a barrel and is sustained for three months, said Tax Commissioner Ryan Rauschenberger. The bill removes that trigger and keeps the tax at 10 percent, even if oil prices increase.

“The goal was to generate a flatter tax rate, one that’s more predictable and reliable, so long-term planning can be made by all,” said Rep. Jim Grueneich, R-Jamestown, a member of the House Finance and Taxation Committee.

Oil prices are not anticipated to reach that high in the 2017-19 biennium, so there would be no fiscal impact to the state. The bill needs to be considered by the state Senate.

MHA Chairman Mark Fox testified against the bill in January and threatened to leave the oil tax sharing agreement with the state. The Fort Berthold Reservation accounts for about 17 percent of North Dakota’s oil production.

The tribe also opposed the Legislature’s action last session to reduce the overall oil tax rate from 11.5 percent to 10 percent. In 2015, legislators also removed tax breaks for the oil industry that would have kicked in while oil prices were low.

A service truck drives past an oil well on the Fort Berthold Indian Reservation in North Dakota, U.S. on Nov. 1, 2014. REUTERS/Andrew Cullen/File Photo