State Legislators Debate Raising Taxes On Oil, Gas

As the state legislature continues to wrangle with a nearly $900-million budget shortfall, Democrats want to increase taxes on oil and natural gas production. But Republicans aren't so sure.

Democrats say increasing the gross production tax, the tax on the production of oil and natural gas, could bring in hundreds of millions of dollars for the state. But they fear the industry, with its powerful lobby, has become a sacred cow in the capitol.

“Our caucus still has amendments on the floor to raise the gross production tax to either seven percent or five percent. We want to give the republicans an option. They can choose whatever they want, we'll support either one and bring in either $300-million or $500-million," said House Minority Leader, Scott Inman.

But Republicans are reluctant to make those choices, leaning instead towards reducing tax breaks to the industry.

"I can tell you there have been discussions from members that want to have discussions about that. We are, we're discussing everything," said House Speaker, Charles McCall.

And Oil and Gas industry leaders say an increase in the gross production tax will just hurt the state economy.

"You don't tax something you want more of. And what we really need in this state is drilling rigs running.  So, you don't dis-incentivize the one activity you want, which is rigs running and new wells being drilled. And that's what the gross production tax increase would do," said Chad Warmington with the Oklahoma Oil & Gas Association.

Democratic leaders say they will not support Republican measures, like increasing the tax on gasoline, while the gross production tax remains the same.