HBA-RBT H.B. 1310 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1310
By: Merritt
Ways & Means
4/8/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, severance taxes must be collected for each barrel of oil and
each thousand cubic feet of gas produced in this state.  As the price for
oil and gas declines, "stripper wells" producing minimal amounts of oil or
gas are often shut down until more favorable conditions arise.  The oil and
gas industry is the only industry in Texas paying a tax on producing a
product.  The severance tax was established in 1901 and Senate Bill 290,
recently signed into law, provides temporary emergency relief of the
severance tax through the end of fiscal year 1999.  H.B. 1310 permanently
waives the severance tax imposed on oil wells that produce no more than 10
barrels per day.  This bill allows domestic producers to compete on a level
playing field with multi-national oil companies who import over 50 percent
of the oil used in the United States.   

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter B, Chapter 202, Tax Code, by adding Section
202.058, as follows: 

Sec.  202.058.  EXEMPTION FOR LOW-PRODUCING OIL WELLS.  Defines
"commission" and "qualifying lease."  Provides that oil produced from a
qualifying lease is exempt from the severance tax imposed by this chapter.
Provides that a person filing a report under this chapter must include the
number of barrels of oil purchased or produced during the period covered by
the report that are exempt under this section.  Provides that if the tax is
paid on a barrel of oil exempt under this section at the full rate provided
by Section 202.052(a) or (b) (Rate of Tax), the person paying the tax is
entitled to a credit against taxes imposed by this chapter for the amount
paid.  Provides that to receive the credit, the person must apply to the
comptroller for the credit not later than the expiration of the applicable
period for filing a tax refund under Section 111.104 (Refunds).  Provides
that to qualify for an exemption the person responsible for paying the tax
must apply to the comptroller. Requires the comptroller to approve the
application of a person who demonstrates that the oil production is
eligible for a tax exemption.  Authorizes the comptroller to require a
person applying for the tax exemption to provide any relevant information
necessary to administer this section.  Authorizes the comptroller to
establish procedures to comply with this section. 

SECTION 2.  Amends Section 202.052(c), Tax Code, to make conforming changes.

SECTION 3.  Effective date: September 1, 1999.
            Makes application of this Act prospective.

SECTION 4.  Emergency clause.