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Billions At Stake for State in Tax Challenge


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billions-dollars-stake-court-hear-oil-drillers-taxTexas Tribune: Billions At Stake for State in Tax Challenge

by Jim Malewitz March 7, 2016

 

The Texas Supreme Court on Tuesday will hear arguments in a case that could deliver a multi-billion windfall to struggling oil and gas producers by taking a major bite out of state tax revenue.

 

The issue before the justices may sound arcane: Are metal pipes, tubing and other equipment used in oil and gas extraction exempt from sales taxes? But a yes to that question, brought by a Midland-based driller, could trigger a flood of refunds that would wipe out the state’s projected $4 billion budget surplus, Texas Comptroller Glenn Hegar warns.

 

“This one’s as big as they come,” the Republican said in an interview. “The neon light lights up, because of the sticker shock.”

 

Southwest Royalties, a subsidiary of Clayton Williams Energy, filed its lawsuit in 2009, just before improved technology unleashed a surge of oil production that transformed the U.S. energy landscape. Susan Combs, Hegar’s predecessor, was named in the original lawsuit, which has wound through the court system for years.


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