Oil and Gas Tax Holiday

End the Tax “Holiday” for Oil and Gas Companies


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The success of Montana’s families and communities depends on our ability to invest in the vital public structures that educate our children, keep our communities safe, protect our land and water, and provide health care and other services. Our current oil and gas tax structure hinders our ability to make these collective investments by diverting revenue from state and local governments toward the profits of oil and gas companies.  While resource development plays important role in Montana’s economy, we must strike a fair balance between supporting the boom and putting Montanans and their communities on the path to long-term prosperity.

Oil and Gas Tax “Holiday” – The Basics

In Montana, production from newly drilled wells is taxed at a much lower rate (0.76%) for the first year to year and a half of operation. After this period, also known as the oil and gas tax “holiday,” the tax rate increases to 9.26%.

In reality, wells produce the greatest amounts of oil and gas right after drilling. As a result, oil and gas companies make the largest profits when their tax rates are lowest. At the same time, communities around developing oil and gas fields are struggling to deal with the effects of the boom – the increased demand for housing, public safety, and education; the strain on our roads, bridges, and water systems; and the environmental impacts of resource extraction.

Supporting Montana’s Impacted Communities

Local and state governments fund these projects with tax dollars. Unfortunately for Montana’s affected communities, oil and tax revenue is lowest when they need it the most. This financial strain means overcrowded classrooms, unaffordable housing, crumbling roads and bridges, and an insufficient police force for Montanans across the state. We fail to meet our communities’ most basic needs, and it becomes impossible to proactively protect and grow our economy.

Rather than giving oil and gas companies a tax break and making it difficult for Montanans to survive and thrive, oil and gas tax revenue would be better spent maintaining public structures like education, public sewers and water systems, public safety, good roads, and healthy communities that help Montana retain and grow jobs now and into the future.

Our Solution

The Partnership for Montana’s Future believes that the state should repeal the oil and gas tax “holiday” and distribute those funds to meet the needs of the communities affected by the oil and gas extraction. Revenue generated by ending this tax break could be used to address the short and long term issues created by the oil and gas boom. This approach would protect Montana’s families and communities while continuing to grow our economy.