Oil Tax Resurfaces

As termed-out Rep. Pedro Nava runs for Attorney General, his controversial bill to create an oil severance tax is getting more attention. In a piece in Legalnewsline.com, the idea--which voters defeated a few years ago (Prop 87) and later revisited by Arnold-- is presented as a classic tax and spend proposal.

Nava gave his bill the tediously cliche title the "Oil Industry Fair Share Act." (Side note: whoever the pollster is who first focus grouped the phrase "fair share" and determined that it tested well enough to hang on every tax hike proposal ever put forth in any legislative body in America, should have copyrighted it-- he'd be a gazillionaire.)

Anyway, Nava claims that California is the only state not to have an oil severance tax and that because California produces so little oil in the grand, global scheme of things, it would not impact the cost of gas at the pump. (Nava estimates the tax to be worth $1.5 billion per year).

My immediate reaction to that comment is that Nava appears to believe the tax is ok, as long as oil production remains low. To put it another way, this is a bill designed as much to stifle oil production (no surprise to anyone familiar with Nava) as it is to raise revenue.

Legalnewsline.com obviously picked up on that too, because it points out that a respected consulting firm, Law and Economics Consulting Group, studied the impact of the bill and concluded that it would be a job and an industry killer :

"The report, released in January, estimated that the oil producers' tax could, among other things, cause steep declines in the state's oil and natural gas production and the loss of nearly 9,900 jobs."

California's oil production is already among the most heavily taxed in the country. This new oil tax would make California's combined taxes on petroleum the highest in the nation by far," the LECG report said.

AG candidate Nava to propose oil severance tax [Legalnewsline.com]