NGI The Weekly Gas Market Report / NGI All News Access

Producers Attack Bradley's Plan to Cut Tax Breaks

Producers Attack Bradley's Plan to Cut Tax Breaks

The Independent Petroleum Association of America came out strongly against a tax proposal presented earlier this week by Democratic presidential candidate Bill Bradley that would do away with several loopholes currently benefiting oil and gas producers.

Bradley promised last Tuesday that if he's elected president he would shut down corporate tax shelters and loopholes resulting in an expected revenue increase of $125 billion over 10 years. Such special tax favors to big business force average Americans to pay more, he said. Bradley, a former New Jersey senator who sponsored the 1986 tax bill and its loophole closures, detailed his own tax plans at a luncheon with New Hampshire business leaders on Jan. 4.

"For a person who served for so long on the Senate Finance and Energy and Natural Resources Committee, it is unfortunate that Sen. Bradley fails to understand the difficulties facing domestic oil and gas producers, the industry at large and the role that tax laws play in allowing companies to retain capital they need to keep producing in the United States," said IPAA Chairman Jerry Jordan.

The bulk of the new revenue produced by Bradley's tax plan is expected to come from tougher enforcement of the existing tax code through stepped-up audits of large corporations and increased penalties for illegal tax-avoidance business transactions. However, among other things his proposal would do away with about $2 billion in "subsidies" to hardrock mining companies, oil and gas producers and ranchers grazing livestock on federal land.

One provision he would repeal currently allows oil and gas producers, as well as hard rock miners, to claim an up-front tax deduction for intangible exploration and development drilling costs. He also would repeal the 1990 15% tax credit for enhanced oil recovery costs. Bradley claims the two provisions cost taxpayers more than $200 million per year in lost revenue.

IPAA's Jordan said the current tax code gives producers "the ability to retain the capital they need to maintain the continued development of domestic resources. Given the realities of the international market place, the tax code is one effective tool producers can use to compete with large foreign government-owned oil companies. It also recognizes the need to maintain a strategic domestic component to U.S. oil and gas supply.

"By eliminating tax elements in that code that were carefully crafted over many years to assist domestic producers in maintaining and developing oil and natural gas production, Bradley's plan would further damage the industry's production the country needs to fuel its vibrant economy and to safeguard its security," he added.

Rocco Canonica

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus