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State Impact Report: No Production Tax on Limestone Hurts Counties

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State Impact-Oklahoma

An effort to impose a tax on the mining of limestone, sand, and other aggregates is dead for this legislative session.

Sen. Frank Simpson’s, R-Springer, bill failed in a senate committee last week, and Simpson confirmed to StateImpact that he will not try to bring it forward again in 2013.

The idea was to treat mining operations more like energy companies, which pay a 7 percent gross production tax on the oil and natural gas they remove from the ground.

“Gravel and rock and sand are a natural resource just like oil, natural gas, copper, or lead,” Simpson says.

More than 80 percent of the gross production taxes collected in Oklahoma go to the state’s general revenue fund. But some of that tax revenue goes back to oil and gas-producing counties to improve local schools and repair roads.

Simpson’s bill would’ve allowed counties to hold a referendum and decide for themselves whether to tax aggregate miners, and at what rate. But creating a new tax is virtually impossible in Oklahoma because of State Question 840, the 1992 law that requires a 75 percent legislative majority to enact new taxes. 

“That bill has been around for quite a while. I think, probably at least 10 years that that concept has been tried in the Senate,” Simpson says.

The Oklahoma Aggregates Association is a big opponent of any new severance taxes on mining. Executive director Jim Rodriguez says taxes on mining companies are too high already. He’d like to see minerals exempted from sales taxes, too.

“Oklahomans are already paying for the sales tax on aggregates that a contractor buys when he builds a project for the State of Oklahoma,” he says. “That’s money going around in a circle. We shouldn’t tax that.”