|Loveland's Independent News Source
|McWhinney Maneuvers To Avoid
|Colorado Taxes On Oil & Gas Wells
The State of Colorado imposes what is
called a "Severance Tax" on production
from oil and gas wells anywhere within the
State of Colorado.
Half of the revenue raised from the money
collected from the severance tax is used
to fund the state's Department of Natural
Resources while the other half is returned
to the county where the well is located to
off-set the cost of maintaining roads and
other burdens imposed by the industry.
One study conducted by the Colorado
State Legislature determined in 2012
Colorado produced 49 million barrels of
oil they valued at $4.1 billion. According
to that same study only $118 million was
collected in taxes.
(Latin for According to Value)
In many western states, including
Colorado, mineral interests are
considered "real property" just like real
estate instead of personal property.
Taxes upon real property is determined
by finding its "real value" according to
what someone is willing to pay at that
particular time and place making
assessment in each county complicated
Why McWhinney Preferes Fracking
Oil producers in Colorado are allowed to
offset the state's Severance Taxes by
getting a credit for any Ad Valorem taxes
they have paid locally (essentially
property taxes estimated by the value of
the well's production).
This tax credit is controversial in Colorado
since a legislative study two years ago
found the average producer is able to
reduce their taxes paid to just 1.3% of
production value (lower than other states).
McWhinney's incentive to use the Ad
Valorem tax offset of what is owed in
Severance Tax is even greater as they will
likely receive back 98% of the property tax
(Ad Valorem) they pay through the City of
Loveland's Urban Renewal Scheme for
Centerra which the developer controls
and not the city.
While offering the City of Loveland even a
token amount of revenue in exchange for
the likely valuable production McWhinney
can make from the planned fracking of
Centerra it is likely they will hide behind
state statute to only pay severance taxes
which are not already offset by the ad
valorem tax they get back to their metro