In 1999, the legislature created a tax break for oil and gas companies that lowers the taxation of oil and gas production during the most profitable period of extraction. At the time, proponents of the tax break claimed that it would encourage economic development in Montana’s resource-rich areas, a claim unsupported by the facts. In reality, oil and gas companies operate where there is oil and do not base their decisions on state taxes, which are just a small fraction of their total costs.
This tax break now costs the state and communities impacted by resource extraction tens of millions of dollars per year. As resource development continues in Montana, our communities and their residents feel the strain on public services and structures. The money given to oil and gas companies as a tax break would be better spent maintaining public services and structures like education, public sewers, water systems, and good roads maintaining healthy communities that help Montana retain and grow jobs now and into the future. In short, the oil and gas tax holiday is ineffective and is costing Montana millions in revenue for public services and infrastructure. It is time to take a hard look at the effectiveness of this corporate tax break.
>>>Read our full report on the Oil and Gas Tax Holiday.
MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.