The Louisiana Oil and Gas Association announced it had reached an agreement with Gov. Bobby Jindal’s administration about how to reduce tax exemptions for the industry. Details of the proposal, which is part of Jindal’s larger effort to eliminate income and corporate taxes and replace them with higher and broader sales taxes, were not immediately available.
Don Briggs, president of the association, said that the deal on the tax breaks, known as severance tax exemptions, would benefit drillers operating in the state.
“We believe the proposal we have discussed with the administration will create more jobs in the oil and gas industry for Louisianans,” Briggs said in a news release.
Administration officials have said that existing tax exemptions on oil and gas extraction would be cut by about $289 million under the plan, halving the breaks those industries now receive. The details of how that would be achieved have not yet been discussed with the public or media.
Briggs said some sectors of the oil and gas industry favor the overall tax swap, while others are still waiting for a final set of bills before deciding whether to support the plan.
Oil and gas service companies would not be subject to new sales taxes on services under the administration’s plan, something Briggs referred to as “good news.”
“While a specific tax plan bill has not been drafted or filed at this time, the oil and gas industry certainly looks forward to reviewing the bill,” he said.
The association’s statement came the same day as the Louisiana Association of Business and Industry said they would oppose Jindal’s plan.
LABI, one of the most powerful lobbying groups in Louisiana politics, came out against the plan because it is expected to shift about $500 million of the state’s tax burden onto businesses. It is not clear whether that figure, which was used by Department of Revenue Executive Counsel Tim Barfield in a hearing Tuesday, includes the reduction in severance tax exemptions.