Thursday, July 30, 2009

California Needs an Oil and Gas Severance Tax!

If California was a nation, it would be the 8Th largest economy in the World. California is a 'rich' State.....The richest State in Union. Rich in natural resources and rich in so many other ways.

Yet, right now, California has been financially stricken by the economic downturn with it's high unemployment rate, a severe reduction of tax revenue, and the FAILURE of The Governor and Legislature to act responsibly in the face of billions of dollars of deficit.

Yesterday, Governor Schwarzenegger signed the most oppressive, ignorant and politically motivated budget in the history of California. Included in this budget are some minimal new taxes that effect all California residents AND negatively impact our most vulnerable citizens. It is a budget of 'smoke and mirrors' that will need to be revisited within the next six months, for sure. Those most effected by the severe, deep revenue cuts are children faced with abuse, the elderly and disabled who have no other place to turn, students, police and fire protectors. Some people will die as a direct result of what the California politicians have done. There were alternatives to this devastation. One alternative is to impose an OIL and GAS SEVERANCE TAX.

In her June 29, 2009, proposal "California Needs an Oil Severance Tax", California State Senator Lori Hankock succinctly and clearly lays out the facts of why such a tax should be imposed and how it can be done. Ms. Hankock reports there are 22 major oil producing States in the U.S. Of these States, only one State, California, does not have such a tax. California is the third largest oil producer in the country and still it is not enough to serve California's consumption. California imports oil and gas from Alaska among other sources. Such conservative States as Alaska, Texas, Louisiana and Mississippi each have significant oil and gas severance taxes. Alaska (25%), Texas (7 1/2% on a sliding scale), Louisiana (22%) and Mississippi (6% also on a sliding scale). Essentially, with the severance taxes California pays to the Alaska oil companies, is subsidizing the citizens of Alaska in some way. A severance tax in California would bring billions of new tax revenue to the State.

So, why has a Gas and Oil Severance Tax not happened in California? Simple. Enough of California's legislators have accepted money from the oil companies (and lobbyists) for their elections and re-elections to stop this tax. For these politicians, staying in office is their number one priority. All else comes after that point. Accordingly, California has no severance tax when one of it's natural resources, a part of this State's wealth, is taken away.

In order to legislatively pass any new tax in California, a two-thirds majority vote in both the Senate and Assembly is necessary. So, a handful of these 'bought and paid for' politicians can effectively stop a severance tax. And who are these politicians? Look at the State's oil producing counties. Kern, Orange, and Los Angeles among others. Look at their campaign contributions. Look at these oil politicians calendars and see who they meet with on a regular bases. Look at their voting record. And then vote them out of office.

There is the argument from the DISCONNECTED oil politicians that any new taxes will be passed on to the consumer at the pump. This is a bogus argument, not true. This severance tax will not drive prices up. Oil prices are set on a global market, and that market is competitive. There have been no 'at the pump price increases' in the 21 States that do have this tax.

And so, Governor Schwarzenegger and California Legislature, why are you not imposing an oil and gas severance tax?

John

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