New Severance Tax On Limestone Not Dead After All

Joe Wertz / StateImpact Oklahoma

A gate into a silica sand mining operation near Mill Creek in south-central Oklahoma.

For years, south-central Oklahoma lawmakers have been pushing for a new tax on companies that mine for stone and sand, particularly in the sensitive Arbuckle-Simpson Aquifer, location of some of the world’s best limestone.

They haven’t had much luck in red-state Oklahoma, and as StateImpact reported earlier this month, the effort appeared to be dead again this session.

Springer Republican Frank Simpson’s Senate bill would’ve allowed counties to impose a ‘severance tax’ on each ton of aggregate removed from the ground and sold in a different county or out of state.

That bill got a hearing, but didn’t make it out of committee, and Simpson expressed little hope for similar legislation in the House.

“We still have a vehicle in the House, but we probably won’t pursue it this year,” Simpson said.

But after passing through a subcommittee, the House version still has a chance.

It addresses one of the biggest concerns on the Senate side: The ‘double-tax’ that would result if a new severance tax is added to the sales tax. Charles McCall, vice-chairman of the House Revenue and Tax Subcommittee, and the bill’s author:

“The bill is structured to allow a severance tax by county vote, but only on material where a sales tax is not already collected. If it’s sold in Oklahoma to an end user in Oklahoma, there would be appropriate sales tax collected and remitted on that. It would stay with the county and the State of Oklahoma.”

McCall says aggregate-rich Oklahoma counties don’t get much more than damaged roads when companies from Texas and Germany send the rocks back home to be sold.

“However, if this material were sold out of state — and there is a large amount of material that does leave the State of Oklahoma, — whichever destination state that it arrives, if there is applicable sales tax it would be remitted in that state. So we’re not interested in a double taxation scenario, but we are interested in a financial benefit on that material where those sales tax dollars leave the state.”

McCall’s bill still has a long way to go, but previous attempts at creating a severance tax on aggregates haven’t gotten this far.

“I think we have some traction in the House. Ultimately, if we can get it through the House I hope the Senate will take a good look at it again with an open mind,” McCall says.


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