Check the status of this bill: SB3230
- The current Illinois statute levies a miniscule 3% tax on the production of oil and gas for the first 24 months of production. Thereafter, the tax increases to 6%. The 24-month lower taxation amounts to a tax “give away” to the industry. Frack wells normally produce the most oil and natural gas in the first few years of production and are waning by the third year. Most states with statutes that regulate fracturing do not levy a lower tax when production is at its highest and have higher fracking taxes than Illinois. For more information see:
- http://articles.chicagotribune.com/2013-04-19/news/ct-biz-0331-fracking-state–20130331_1_severance-tax-tax-rate-tax-holiday and
Examples of taxation in other states – none have waiting periods to collect tax:
- LA-12½% of its value at the time and place of severance; 6¼% for wells producing average of 25 barrels or less; 3 1/8% for wells producing an average of 10 barrels or less (Source: LA statute)
- WY– 11.7%, cumulative tax revenue
- ND– 11.5% cumulative tax revenue
- MT– 7.6%, cumulative tax revenue
- TX-4.6% of market value of oil produced and saved; 7.5% of market value of gas produced and saved (Source: Railroad Commission of TX website http://www.rrc.state.tx.us/programs/og/severancetax.php
- Other states, such as North Dakota, are struggling with costs associated with fracturing operations such as road repairs and construction and other infrastructure needs created by the industry.
Purpose of the bill: To levy the production tax when oil and gas production is at its peak. Production tax revenue is increased by eliminating the lower taxation rate “give away” to the industry for the first 24 months.
Solution: Increase revenue to our State by collecting additional taxes on oil and gas production from fracturing operations. Please co-sponsor and support SB3230.