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BP takes Colorado to court and wins millions in tax breaks

BP takes Colorado to court and wins millions in tax breaks

By on May 11, 2016Share

It’s not too often one comes across a brand-new fossil fuel handout in 2016, but the Colorado Supreme Court just delivered the oil and gas industry a fat one. In a case pitting BP against the state’s Department of Revenue, the Court decided in late April to authorize some hefty tax deductions for the oil and gas giant. Taxpayers are now on the hook for up to $100 million in payments to BP and other companies this year — and since the ruling sets a precedent, they’ll take the hit in perpetuity.

As a company extracting natural resources in Colorado, BP must pay a severance tax to the state. However, natural gas extractors are allowed to deduct costs they can attribute to “transportation, manufacturing, and processing.” In the case, originally filed in 2005, BP argued that foregone dollars that the company “could have earned had they invested in other ventures rather than in building transportation and processing facilities” should count as these types of costs.

In other words, BP alleged that the money they theoretically could have earned, had they spent it elsewhere, represented a deductible cost to the company. And the Colorado Supreme Court agreed.

“It is absolutely a subsidy,” said Jessica Goad, communications director at Conservation Colorado. But Colorado is by no means alone in offering breaks to oil and gas companies. The United States spends some $20 billion in national fossil fuel production subsidies annually.

Colorado already has the lowest effective severance tax in the West. Under state law, oil and gas companies are able to count property taxes against severance tax payments.

In a last-ditch effort to disallow this kind of deduction under state law, Colorado House Democrats introduced a bill on Monday — but it died a procedural death on Tuesday night. Colorado’s legislative session ends on Wednesday. “It’s hard to write a brand new bill that solves a brand new problem in three days,” said Goad.

BP and others will continue to collect this windfall unless the legislature returns to the issue next session.

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BP takes Colorado to court and wins millions in tax breaks

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Big Oil Anniversary: 102 Years of Oil Spills and Pollution

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Big Oil Anniversary: 102 Years of Oil Spills and Pollution

Posted 2 March 2015 in

National

This article is the first in a series highlighting the success and promise of renewable fuel in the United States: clean, secure, American energy. Since the passage of the Renewable Fuel Standard in 2005, the renewable fuel sector has grown dramatically, supporting more than 852,000 jobs today.

This week, America celebrates 102 years of oil spills, pollution, and environmental havoc — all a result of tax breaks and subsidies for Big Oil that have persisted for over a century.

While oil continues to be a bad investment for our economy, our environment, and our wallets, there is a better, cleaner choice: homegrown American ethanol.

Where it all began…

Starting in 1913, oil companies were allowed to treat the oil in the ground as capital equipment, a type of deduction that allows them to write off a percentage of each barrel extracted from the Earth. That subsidy, included in the Revenue Act of 1913, was the first time that a tax break for Big Oil had been written into the tax code. It still stands today.

Keeping up with the times.

While that first tax break allowed oil companies to write off 5 percent of the costs from oil and gas wells, oil companies can now deduct three times that amount — 15 percent.

Higher gas prices for you? Bigger tax breaks for Big Oil.

This percentage depletion subsidy increases when oil prices increase. So when your gas prices go up, Big Oil enjoys bigger profits… and gets even larger tax breaks from the federal government.

What does it cost?

A report by the Center for American Progress estimates that eliminating this subsidy would save $11.2 billion over ten years. And this isn’t the only tax break that Big Oil receives. All told, tax breaks for Big Oil cost American taxpayers more than $75 billion each decade.

Tell Congress: It’s time to end Big Oil subsidies.

While Congress might be oil rigged, it’s time for them to end the wasteful subsidies that Big Oil has received for more than a century. With climate change as a growing threat, we need our leaders to invest in clean, secure sources of American energy — including renewable fuel.

Source: ThinkProgress

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Big Oil Anniversary: 102 Years of Oil Spills and Pollution

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