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Here's your severance debate Sunday, Mar 16, 2008 By John Brummett I don't want to bore you too much, because that's counterproductive to a newspaper column's purpose. But I'd like to take this space today to present the debate about whether to raise the severance tax on natural gas, as Gov. Mike Beebe proposes. Our format will be to go back and forth with the pro and the con. I'm personally pro, of course, but I understand the con. I'll present the con as an honest broker. Really. So let's go. Pro: Arkansas has never valued its rich natural resources sufficiently. To let out-of-state companies come in here and tear up our roads and our land to drill for our gas for big profits, then fail to extract a reasonable tax for our public needs, is a travesty. Con: It's not the state's gas. It belongs to the landowner or the mineral rights owner. If state government wants some of this money, let it buy some equipment and some drilling rights . Pro: OK, yes, it is true that the actual owner is the guy with the deed to the land or the mineral rights. But a state is a community of common interest. Our natural assets should accrue to the benefit of all, so long, of course, as we don't punish any individual property owner. This isn't going to punish the property owner. Con: Punishing the property owner is precisely what we're doing. These landowners and royalty owners out there are going to see their payments reduced by this higher severance tax. Pro: Maybe, but maybe not. It depends on the terms of the individual contract. But, either way, these landowners and royalty owners are going to be a lot better off than they were before this gas play started. Con: Maybe, but maybe not. Do you keep up with the news? Do you know there's a similar gas field down in Mississippi? Do you think Haley Barbour wouldn't cut the industry a sweet deal? Looks like we'd get tired of losing out to that sonofagun. Pro: Oh, for heaven's sake. What a tired clich? and scare tactic. These gas companies are invested in Arkansas. They've signed off on this proposed increase because it's a lot better deal than taking their chances on a higher rate in an initiated act. This is the very mistake we've always made in Arkansas - thinking we're so pitiful that we can't afford to stand up to anybody. It's time we stood up. We need roads. Con: How many roads do you think this severance tax would build? About a hundred yards a year, I reckon. The only way anymore to do substantial road work is to get the voters to approve big debt based on future federal turnback. This severance tax isn't going to make any difference for our roads. Pro: Let me refer you to your county judge, who needs to fix some roads. Let me put you in touch with your mayor, who needs to fix some streets. Be aware that 30 percent of this money is city and county turnback. It's true that the severance tax might not build I-49 or I-69. Only the feds can do that. But it might keep your pickup truck out of a pothole on the way to work. Con: Did you get a load of these gas heating bills this winter? Why in the world would we went to put a new tax on those bills to run up what poor people have to pay to be warm? Pro: Natural gas prices fluctuate by broad-based market forces. A little nickel tax on what they're finding in north-central Arkansas isn't going to figure in the retail price. Con: If you think consumers don't end up paying the taxes, you're crazy. Pro: I'm not crazy. You're right. But, in this case, our little severance tax is a very modest, almost inconsequential factor in gas prices. The debate went on from there, but not productively. ------- John Brummett is a columnist for the Arkansas News Bureau in Little Rock. His e-mail address is jbrummett@arkansasnews.com; his telephone number is (501) 374-0699. |
