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Agricultural News


Wind Industry Proposes Tax Plan to Generate State Revenue But Would Reduce Ad Valorem Dollars

Mon, 22 Jan 2018 16:49:08 CST

Wind Industry Proposes Tax Plan to Generate State Revenue But Would Reduce Ad Valorem Dollars With much debate happening in Oklahoma right now, on how to solve the state’s budget crisis, officials representing the Oklahoma wind industry joined the conversation last week, sending a communication to all members of the Oklahoma House of Representatives and Oklahoma State Senate outlining taxation proposal options that the wind industry would be obliged to adopt for its part in contributing to state coffers. The options proposed by the wind industry would ensure it is treated in the same way in which the oil and gas industry is in terms of taxation.



OK WindPower Executive Director Mark Yates stated recently that, the Oklahoma wind industry recognizes the State's recurring revenue problem and seeks to be a partner in developing a solution. But, he insists, too, that the recurring battle between the oil and gas industry and the wind industry must cease to achieve a common goal



Yates sat down, Monday, with Radio Oklahoma Ag Network Farm Director Ron Hays to discuss his position on the matter, offering two viable options to help generate revenue for the state and at the same time, avoid double taxation on the industry. Most importantly, Yates says he wants to make sure Oklahoma’s wind industry maintains its ability to continue investing in our state’s communities for the benefit of all Oklahomans.



“The Step Up Oklahoma group obviously came out with their own proposals on revenue and reform,” Yates began. “A part of that included wind. They kind of threw out an arbitrary number of $15 million from wind.”



Yates made a point of noting that the wind industry as a coalition had not been included in any discussions to strategize a state budget fix. His message was received and as a result he was invited to join in and open a dialogue. Two options on how the wind industry could alternatively contribute, resulted from that discussion.



“If you look at the two proposals, one says, ‘Treat us like oil and gas… let’s quit the fighting…let’s create parity,” Yates said. “The other looks at the nameplate capacity tax, which would provide over $50 million annual revenue in the state and be a much more stable source of revenue as opposed to a generation tax.”



However, these options would offset the current ad valorem taxes the wind industry is paying into the 23 counties in which it conducts business. Yates says, to avoid double taxation, there would have to be some relief to ad valorem taxes in the wind industry’s tax structure. This would deprive these affected rural communities of about $9 million each on average.



“As an industry, we would prefer things to stay the way they are and pay ad valorem,” Yates remarked. “It’s where we do business and it keeps those dollars local. But, at the end of the day, political pressures of groups wanting to push wind into a corner… that’s where these conversations have ebbed and flowed.”



Below, is a brief outline of the two options proposed by the wind industry.



- Option 1: The Wind Industry proposes the exact same tax treatment as the Oil and Gas
industry to create more parity within the energy sector.



Equivalent to 4% GPT for 36 months and 7% GPT thereafter in lieu of ad valorem at
the site of production, of which 3% of this revenue would return to the county/local
level.



- Option 2: The Wind Industry proposes an Electricity Generation Facility Tax of $2,000 per
“MegaWatt Nameplate Capacity" payable annually to the Oklahoma Tax Commission.



The nameplate capacity tax on all generation, offset by a corresponding reduction in
ad valorem at the local level, replicates the treatment oil and gas receives on its gross
production tax.



This would generate more than $50,000,000 in stable revenue for the State of
Oklahoma. This results in Wind exceeding the $15,000,000 outlined in the current
proposal while also providing parity among all forms of electricity generation.



“The wind industry wants to come to the table with solutions,” said Yates. “These solutions create parity among all of the energy providers and ensures the wind industry is not burdened with a double tax. It is a fair and equitable solution.”



Additionally, OK WindPower outlined the following positions on behalf of the wind industry:



- Request forward-looking tax proposals only so investors, and Oklahoma’s business
reputation, are not further damaged. Retroactivity jeopardizes existing contracts and binding
agreements and is detrimental to the State’s future business development efforts.



- Avoid any kind of double-taxation for Wind, just as it doesn’t exist for any other energy or
electricity.



- Recognize that all incentives for Oklahoma Wind power have ended.



- Encourage the need for a stable investment climate in Oklahoma for all forms of energy and
investment by suggesting the end of anti-wind organizations forever and a 2, 3 or 4 year
moratorium on new taxes for all energy.


Listen to Yates and Hays discuss this matter in more detail, by clicking or tapping the LISTEN BAR below.



   



   

Hear Yates and Hays discuss this matter in more detail, by clicking or tapping the LISTEN BAR below.
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