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MONTGOMERY, Ala., April 29 /PRNewswire-USNewswire/ — Consumer and trade groups gathered on the steps of the Alabama Statehouse to urge opposition to Governor Bob Riley’s (R-AL) proposed $200 million tax on natural gas extracted off of the Alabama coast.
The alliance, which includes Manufacture Alabama, the Alabama State Black Chamber of Commerce (ASBCC), Alabama Petroleum Council, 60 Plus, and Americans for Tax Reform (ATR), has joined together in opposition to the proposed legislation and to raise issues it believes have been ignored by Alabama legislators, who are set to vote on the bill this week. The provision would increase energy prices to consumers and industry, damaging Alabama’s economy and costing much needed local jobs.
George Clark, President of Manufacture Alabama said, “Driving up the price of natural gas with new taxes will increase the cost of doing business in our state and prevent companies from being able to expand and add jobs. As businesses struggle to keep their profit margins, these taxes will result in higher prices for manufactured goods and a negative impact on the economy. Any tax measure that causes business and industry in our state to take a hit will also impact local jobs and economic growth. When voting on this issue, the Alabama State Legislature should consider the best interest of Alabama businesses, and vote against this punitive tax on the energy industry.”
ASBCC President Jerry Mitchell said, “Selective and random application of the tax code to punish or reward business and industry on a one-by-one basis will present a serious impediment to the development of new business within our state. Stable tax and regulatory policies are essential to encouraging needed investments, while punitive tax treatment such as this will prove by example that we are not business-friendly. From a consumer standpoint, it is equally important to recognize that our manufacturing sector relies heavily on natural gas to produce goods which we all depend upon daily. Higher natural gas prices brought on by increased taxes would raise the price of many products and services bought and sold by Alabama’s consumers.”
Dean Peeler, Executive Director of the Alabama Petroleum Council said, “The proposed tax rates are more than double the rate of Louisiana’s tax. Severance taxes and royalties are directly related to the amount of gas production. In 2007, the severance taxes on offshore production generated $41.6 million, but royalties generated $259 million, more than six times the amount of severance taxes. If the state discourages production by establishing a punitive severance tax, it risks harming its royalty income. If royalty income is disrupted, all of these funds and entities relying on them will be harmed. The CITF, for example, pays the debt service on $850 million in economic development bonds. Any excess revenues to the CITF are used to supplant debt service payments for the General Fund. Every dollar the CITF loses, costs the General fund a dollar. Cities and counties received $37 million from royalties in 2007.”
60 Plus Representative Bill Shaker said, “If passed, the governor’s plan for a tax on natural gas would cut jobs for working Alabamans and hurt seniors on fixed incomes. I simply cannot understand how anyone could vote for a new energy tax — especially when consumer energy prices are skyrocketing. This unwanted, unnecessary and expensive tax increase will be watched closely by Alabama senior citizens.”
ATR State Government Affairs Manager Karri L. Bragg added, “While any tax increase would cause damage to the state’s economy and place a higher burden on Alabama taxpayers, a tax hike on natural gas is especially onerous. A higher tax on gas wells will ultimately drive up prices, and at a time in which energy costs are already sky-high, taxpayers cannot manage the added expense.”
Alabama already has one of the highest taxes in the nation on natural gas production and those taxes would be doubled by Riley’s bill. The increased costs of doing business in Alabama will discourage development and drive jobs out of state. In these strained economic times, Alabama can ill-afford this politically-driven price hike.
Americans for Tax Reform