Energy firms got a break in '08

Houston Chronicle ^ | Jan. 7, 2009, 11:40PM | PEGGY FIKAC and JANET ELLIOTT

[thackney]

At a time when the oil and gas industry was reaping record profits, producers got a break under Texas' new business tax, according to a draft report from a state advisory committee.

Oil and gas producers paid nearly $411 million last year under the new business tax, down from nearly $489 million in 2007. The industry also separately pays state levies including severance taxes, which skyrocketed with 2008's higher oil prices.

Most other industries ended up paying more last year than in 2007 under the business-tax expansion, according to a draft of the Business Tax Advisory Committee's report to the Legislature due to be released within days.

The business-tax expansion was approved by the Legislature in 2006 to help subsidize lower state property taxes for schools and to eliminate loopholes that allowed some businesses to avoid the tax by the way they were organized.

But spokesmen for the state's leading oil and gas industry trade group disputed the notion that the industry had gotten a tax break, saying that other taxes paid last year increased due to record-high gasoline prices.

"Texas remains very dependent on oil and gas to pay the bills," said Ben Sebree with the Texas Oil & Gas Association. He said the industry supported the tax rewrite because it thought the tax should be broadened to cover businesses other than those that are capital intensive.

Sebree said he expects the industry's business tax payments will go "way up" this year based on 2008's revenues. Each year's tax tab is based on the previous year's business activity.