Severance Tax Research Articles

Factors influencing forest landowner enrollment in preferential property tax programs

One of the most common approaches to conserving forestland in the US are state-run programs offering reduced property taxes on forestland. Although some form of preferential forest property tax program exists in all 50 states of the US, few studies have examined factors associated with landowners’ enrollment in such programs. As interest increases in incentivizing forestland owners to address various environmental or ecological goals, such as enhancing carbon storage or ecosystem services via private forest management, the need for improved knowledge about factors that influence landowners to participate in such programs grows. We examined factors associated with NIPF owner enrollment in preferential property tax programs in Oregon (US). Oregon currently has two primary preferential forest property tax programs. The Forestland Program is the default program for most forestland owners, and the Small Tract Forestland Option (STF), which is a voluntary program wherein landowners pay reduced annual property taxes and an additional timber harvest severance tax. We used a survey to gather information from 1190 Oregon Small Woodlands Association (OSWA) members owning between 10 and 5000 acres of forestland in western Oregon. Respondents were asked about their socio-demographic characteristics and forest management, as well as their enrollment status in Oregon's preferential property tax programs. Our econometric analysis of survey data indicate that preferential property tax programs enable long-term forest ownership, extended rotation ages, and investment in stewardship activities, suggesting that these programs are likely an effective tool for encouraging environmental or ecological goals among NIPF owners in Oregon.

Impacts of state tax and resource ownership policies on extraction: Evidence from U.S. natural gas production

We analyze the impact of different state tax structures and resource ownership policies on natural and shale gas production. Using state-level, quarterly data from seven of the largest shale gas-producing states from 2007 to 2020, we find evidence that both the type of taxation method and the presence of a forced pooling law impact natural gas production. Using random effects models, we find that impact fees do not significantly affect either natural gas or shale gas production relative to severance taxes. Conversely, we find that in states with volume-based tax rates, quarterly natural gas production increases by 2.5 % relative to those states with revenue-based tax rates. We also find that the existence of a forced pooling law decreases quarterly natural gas production with an estimated decline of between 2.6 % to 3.8 % relative to states where no forced pooling law exists. These findings show that the restrictions imposed by forced pooling laws have larger impacts on production compared with different severance tax structures.

Transition obstructionism and ‘embodied energy injustice:’ a Wyoming case study

ABSTRACT Wyoming is the epicentre of the coal transition in the United States. The coal industry is critical to the state’s economy, both in terms of jobs and a state revenue model dependent on federal coal leasing payments, mineral royalties, and mining severance taxes. However, due to economic, regulatory, and political pressures, the U.S. is currently on track to retire half of its coal-fired electricity generation capacity by 2026. Accordingly, Wyoming faces an uncertain future. Despite the difficult path ahead, many Wyoming policymakers, industry officials, and residents express hostility toward the idea of transition. This often manifests in opposition to renewable energy through policies that double down on investments in fossil fuel energy, despite the increased availability of federal resources and programmes to ease the burden of change. I refer to this phenomenon as transition obstructionism. While transition obstructionism is detrimental to residents across the state, harm is also distributed downstream in the fossil fuel lifecycle, particularly in historically marginalised communities. This article reviews recent efforts by state lawmakers and institutions to actively disincentivize transition and prolong the fossil fuel economy in Wyoming. It then considers how transition obstructionism contributes to ‘embodied energy injustices’ both within and beyond Wyoming.

Mississippi USA'S timber severance tax apportionments and their economic contributions

Eighty percent of Mississippi's timber severance tax collections were authorized by the state legislature in 1984 to fund the Forest Resource Development Program (FRDP), which is a cost share program through which landowners can receive up to 75% reimbursement for their forest management expenses. The remaining 20% is apportioned on shares to counties where timber was harvested. The regional economic contributions of the Mississippi timber severance tax funding spending for FRDP and county governments were determined. Social accounting matrixes (SAMs) were constructed and customized using 2019 data collected by Mississippi State University, IMPLAN, and Lightcast. The modified SAMs were rebalanced to ultimately obtain the total requirements matrix. Funds expended for FRDP and counties in 2019 were run as exogenous final demands. The total possible impact was estimated to be $6.00 million in industrial output and 222 full-time and part-time employment. Because actual expenses were only 72.8% of FRDP funds available that year, this lessened the actual contribution by $1.80 million in output, $1.39 million in value added, and 80 jobs. Regional output contributions correlated moderately with tax collections and forest inventory statistics. Evidence pointed to an inequality of economic flows regarding what South Mississippi paid in tax and the contributions it received in return via industrial activities.

Problems and prospects for development of the gas industry in the domestic market in 2022

The new conditions for 2022 imply a reduction in natural gas exports from Russia to Europe. We expect an overall reduction in natural gas exports from Russia from 244 bill. cub. m in 2021 to 155 bills. cub. m in 2025. Not only physical export flows, but also financial ones will be reduced, which may change the financial condition of Russian companies and require adjustment of their behavior models and strategies. In such conditions, the development of the domestic natural gas market, which has been discussed for the past 20 years, becomes an extremely topical topic. Therefore, this article will focus on the domestic gas market. The main producers of natural gas in Russia, their operating conditions, tax regulation, access to exports and their role in the domestic market will be analyzed and studied. In addition, domestic gas consumers will be considered and the potential for growth in natural gas consumption in the Russian domestic market, which lies in the growth of the chemical industry and the development of gasification, will be assessed. The article will put forward proposals for rebuilding the existing model of the domestic gas market, such as the abolition of the severance tax on new volumes of gas supplies, expanding the capabilities of independent companies in terms of domestic gas supply and gasification, optimizing approaches to choosing settlements for gasification, allowing all gas companies to export LNG, solving the pricing problem: choosing the optimal model for price liberalization in segments other than households and housing and communal services.

Asymmetric responses to severance tax changes: Coal production in West Virginia

I use aggregate and mine-level data to analyze changes in coal production due to West Virginia imposing a 56 cent per short ton severance tax in 2005, as well as the effect of the tax's subsequent repeal in 2016. To do so, I construct a dataset of quarterly coal production for West Virginia and neighboring control states not exposed to changes in severance tax policy. Difference-in-differences results suggest that the severance tax increase had no significant effect on either aggregate or mine-level production. Conversely, I find that the severance tax decrease led to an 11.8% increase in aggregate coal production and a 24.4% increase in mine-level production.

Employment and Income Effects of Investments Made Using the Act 13 Unconventional Natural Gas Impact Fee in Pennsylvania

Unconventional natural gas extraction presents numerous opportunities and risks for communities across the United States. To capture a portion of the revenue generated by the resource states tax unconventional natural gas development. While most states collect revenue via severance taxes, Pennsylvania took a novel approach and established an impact fee on the industry instead. Unlike severance taxes in other states, the fee is collected annually and distributed directly to municipalities. While reports show that municipalities use the funds to pay for critical infrastructure, no best practices on how to allocate the funds exist. Citing the literature on mineral resource extraction and infrastructure-led development in American communities, this study examined impact fee payments made to counties with unconventional natural gas wells. The study evaluated whether counties that used the funds to invest in infrastructure were better off in terms of employment and income than other shale-producing counties that did not. Panel fixed- and random-effects regressions suggested that no statistically significant employment or income effects existed. The results suggest that local infrastructural investments are not a successful way to overcome the resource curse issues identified in the literature.

Threshold analysis regarding the optimal tax rate and tax evasion. Empirical evidence from Taiwan.

For a long time, governments of all countries have attached great importance to the development of underground economic activities. The reason is that the characteristics of the underground economy are hidden and the information disclosure is not sufficient, which not only distorts the economic data indicators, but more importantly, the existence of the underground economy has led to the loss of a large amount of tax base, affecting the long-term economic development of the country. Whether raising the tax burden rate boosts the tax revenue or expand the scale of the underground economy. In this paper, we use Kuznet Tax Curve (KTC) method to analyze the relationship between GDP and TTR/DTR/ITR. We find that the tax base erosion rate of indirect tax is lower than that of direct tax. In addition, we explore the relationship among economic growth, tax rate and tax revenue and adopt SUR-OLS method and Threshold approach to estimate the response of economic growth on total tax revenue(TTR), direct tax revenue(DTR) and indirect tax revenue (ITR) in Taiwan from 1991-2020. Our empirical research shows that when DTR tax rates are between 12.59% and 13%, an increase in income leads to a decrease, not an increase, in DTR, leading to severe tax base erosion. That is, the relationship between GDP and DTR presents a N-shaped relationship. However, ITR does not exist any tax rate threshold effect. Obviously, with the increase of GDP, ITR also increases. This reflects that the difference of tax structure between direct tax and indirect tax plays a key role in the relationship between tax rate and tax base erosion.

FEATURES OF MODERN ERP-SYSTEMS FOR BUSINESS PROCESS MANAGEMENT OF THE ENTERPRISE

The need for the importance of effective management of the enterprise's business processes raises urgent problems of its automation with the help of the introduction of modern corporate information systems. ERP systems include the systems that cover the most important business processes of the enterprise and ensure their integration, optimization, as well as balanced management of the resources involved. The essence, architecture and general characteristics of ERP systems, their functionality and implementation at enterprises are considered. An analysis of literary sources was carried out on the study by many scientists of the essence of the concept of ERP systems, their historical development, concept, as well as advantages and disadvantages and economic efficiency. It was determined that ERP systems allow the most effective planning of all commercial activities of a modern enterprise, including financial costs for equipment restoration projects and investments in the production of new products. The relevance of the research, which is determined by the modern needs of managing business processes of an enterprise or company based on ERP systems, is considered. The expediency of using systems of this class is caused by the need to manage business processes in conditions of inflation and severe tax pressure. The purpose of this work is to study the concept of ERP and the functional capabilities of ERP systems for small and medium-sized enterprises. Various interpretations of the essence of the ERP system, the modern market and examples of existing ERP systems of Ukrainian software manufacturers are presented. To understand the functioning of the ERP system, its structure was considered: blocks (platform and modules); three-level client-server architecture (database, application server, user interface); core modules (production management, supply management, financial management, resource management, customer relationship management, project management). It was determined that the architecture of the software product plays a very important role when selecting a system for business optimization; modules of the ERP system allow you to optimize various aspects of the company's work. The peculiarities of the architecture of the IT-Enterprise ERP system and the functionality of the Perfectum CRM+ERP system for automating business processes of the enterprise are considered. The general characteristics of the systems for the execution of business processes of the enterprise are presented and the most common approach to the classification of ERP systems for the automation of the enterprise's business is determined. The functionality of the Perfectum CRM+ERP system for small and medium-sized businesses is considered. The author proposed the use of such systems for small and medium-sized businesses.

Tax competition versus tax coordination in a multi-region endogenous growth model with an integrated capital market

This paper analyzes tax competition and coordination, determining which is better in a multi-region endogenous growth model. With an integrated capital market, increased capital tax in one region generates external benefits to others through an increased tax base originating from capital flight. Because this efficiency cost affects resource allocation between private and public goods and intertemporal consumption and investment choice, a higher cost derives a lower equilibrium capital tax rate, leading to a higher economic growth rate. Consequently, the inefficiency costs exert two opposite welfare effects via inefficiently low public goods supply and high economic growth. Naturally, tax coordination to cope with severe tax competition is welfare improving to resolve the underprovision of public goods instead of accepting low growth. In contrast, tax coordination is not desirable if tax competition is mild because benefits from high growth outweigh the costs of an undersupply of public goods.

Impact of Petroleum Excise Tax Costs on Firm Productivity in Uganda

The aim of this paper is to investigate the effects of petroleum fuel excise tax costs on productivity of generator-reliant firms in Uganda. Most studies investigated the association between corporate tax and firm productivity, value added tax and firm productivity. This study contributes to the neglected area on the influence of petroleum excise tax costs on firm productivity. In this paper, we employ the ordinary least square (OLS) method for estimations. The results show a negative impact of petroleum fuel excise tax costs on the productivity of manufacturing firms, driven by the severe tax burden. In addition there is a negative significant association between tax cost and household welfare. Therefore tax policy actors should formulate policies that not only raise tax revenue but also boost business growth.

Tax Inspections and Tax Administration Obstacle Reported in Developing Economies

By analyzing data from the World Bank, the study first examines the impact of tax inspections or visits on tax administration obstacles reported by firms. The results show that firms that reported tax visits by tax officials are more likely to reply with tax administration obstacles. The results provide evidence that the more the tax inspections or visits, the higher the probability that firms will reply with major or severe tax administration obstacles. The results also show that firms with government ownership are less likely to reply with severe tax administration obstacles. In addition, the results provide evidence that firms operating in higher GDP per Capita economies and/or firms operating in transition economies have a higher probability of replying with severe tax administration obstacles. When the countries examined are categorized into different groups, tax visits/inspections of tax officials are significant in all country groups. The study would be beneficial in helping policy makers and/or tax authorities to alleviate a firm’s stress or obstacles related with tax administration.

Tendencies and limitations on increasing excise tax on cigarettes in EU member states

The recent studies of levying excise tax on cigarettes and the policy of the EU and its member states aimed at setting a minimum excise tax thereon have been analyzed in order to substantiate recommendations on the respective reform in Ukraine. The article confirms findings that a sharp increase in the excise tax (high excise rates) lead to the growth of illicit trade in such products. For that reason, when initiating corresponding changes to legislation, it is essential to choose such pace of increase in tax rates that would take into account the purchasing power and the level of such rates in neighboring countries. Even severe tax control measures may turn out to be inefficient if there are any conditions for getting high profits from the illicit market. Achieving excise revenue growth without fiscal losses due to the increase in illicit tobacco trade is possible only through a gradual increase in tax rates. It has been established that the negative experience of a number of the new EU countries in reaching the EU minimum excise tax on cigarettes should be taken into consideration while designing future pan-European legislative changes to avoid decisions that would either set out too high target thresholds or disregard the need to provide a sufficient transition period to achieve them. Today significant differences persist in the levels of purchasing power in the member states and there are still opportunities for smuggling cigarettes into the EU through its eastern borders. Given this, several post-socialist EU countries remain vulnerable to new increases in the minimum excise tax on cigarettes and are unlikely to agree on legislative changes that set forth “jumps” in the excise tax rates or their significant growth in the coming years. It has also been demonstrated that most EU countries have abstained from raising cigarette excise tax significantly during the COVID crisis for fear of the illicit trade growth. It has been proven that Ukraine should review the current plan on increasing cigarette excise tax by slowing down the tax growth and extending the plan till 2028.

Tax revenue instability and tax revenue in developed and developing countries

Purpose This paper aims to explore the effect of non-resource tax revenue instability on non-resource tax revenue in developed and developing countries. Design/methodology/approach The analysis has used an unbalanced panel data set of 146 countries over the period 1981–2016, as well as the two-step system generalized methods of moment approach. Findings The empirical analysis has suggested that non-resource tax revenue instability influences negatively non-resource tax revenue share of gross domestic product. The magnitude of this negative effect is higher in less developed countries than in relatively advanced countries. This negative effect materializes through public expenditure instability: non-resource tax revenue instability exerts a higher effect on non-resource tax revenue share as the degree of public expenditure instability increases. Finally, non-resource tax revenue instability exerts a higher negative effect on non-resource tax revenue share as economic growth volatility rises, inflation volatility increases and terms of trade instability increases. Research limitations/implications The main policy implication of this analysis is that policies that help ensure the stability of non-resource tax revenue also contribute to improving countries’ non-resource tax revenue share. For example, governments’ measures that help cope with or prevent the severe adverse effects of shocks on economies (shocks that could translate into higher tax revenue instability) would ultimately help enhance countries’ tax revenue performance. Practical implications The severity of the current COVID-19 pandemic shock (which is a supply and demand shock) and the macroeconomic uncertainty that it has generated – inter alia, in terms of economic growth instability, terms of trade instability, inflation volatility and public expenditure instability – are likely to result in severe tax revenue losses. Governments in both developed and developing countries would surely learn from the management of this crisis so as to prepare for possible future economic, financial and health crises with a view to dampening their adverse macroeconomic effects, including here their negative tax revenue effects. Originality/value To the best of the author’s knowledge, this topic is being addressed in the empirical literature for the first time.

Commonwealth Forum: Should Pennsylvania Enact a Natural Gas Severance Tax?

Commonwealth Forum: Should Pennsylvania Enact a Natural Gas Severance Tax?

What drives climate policy adoption in the U.S. states?

Abstract: Climate advocates increasingly view state policy as a crucial tool to reduce greenhouse gas emissions in the U.S. However, the literature lacks systematic empirical analysis of which, when, and why states adopt policies mitigating climate change. While traditional climate federalism highlights the co-benefits to climate policies in driving subnational policy decisions, more recent work emphasizes the powerful role of partisan control of office. I collect and analyze panel data measuring the strength of state policy from 2007 to 2014 in four areas: renewable portfolio standards, distributed generation, energy efficiency, and severance taxes on oil and gas extraction. While renewable portfolio standards and distributed generation policies were driven primarily by Democratic partisanship in state electorates, energy efficiency policies were less responsive to Democratic partisanship but marginally responsive to unified Democratic control of state government. Finally, these political factors did not measurably influence state severance taxes.

Taxing Flaring and the Politics of State Methane Release Policy

AbstractMethane is a potent greenhouse gas but it has received strikingly less social science attention than carbon dioxide in examining climate policy options. This article explores American state policy toward methane that is not captured and instead released into the atmosphere during oil and gas production. It examines whether states have adopted market‐based approaches to price methane flaring and venting through long‐standing severance taxes on natural gas extraction. Such taxes exist in all but one production state, routinely materializing after prolonged adoption battles. Most states have maintained methane release exemptions from these taxes through either statute or administrative discretion between 1960 and 2000, although a few have allowed some form of pricing. Two state legislatures have explored applying these taxes to methane releases on multiple occasions since 2000, amid expanded shale era output and growing public concern about climate and air quality impacts. Steadfast production industry opposition, rather than technical feasibility, emerges as the primary factor leading to rejection in these cases. Even when framing releases as a conventional air contaminant or as permanent loss of a nonrenewable natural resource, states largely continue to exempt flared or vented methane from severance taxes.

Potential Changes to Louisiana Hardwood Timber Industry Economic Contributions Following Emerald Ash Borer (EAB) Invasion: An Input-Output Approach.

The emerald ash borer (EAB) Agrilus planipennis (Fairmaire, Coleoptera: Buprestidae) will have untold impacts on the contributions hardwood timber products provide Louisiana's economy. We modeled a scenario where ash mortality was assumed to follow a PERT-Beta distribution to kill essentially all Louisiana ash within 25 yr. Future ash mortality volumes were discounted to the present and valued using market prices to estimate a present effect on timber receipts. Assuming the dead timber would have otherwise been typical trees of average quality, stumpage was presently valued at US$1.57 million, with deliveries totaling US$3.48 million. A salvage arrangement using the double declining balance method coupled with a second PERT-Beta distribution centered upon Louisiana's current 2.84% harvest-to-inventory proportion depreciated the timber's value monthly over 1 yr. Following salvage, average stumpage revenue declined -US$1.54 million, mill deliveries fell -US$3.41 million, whereas state timber severance tax collections declined by -US$46,800. The value added and employment direct effects to Louisiana's economy averaged -US$882,400 and -41.6 jobs, respectively. The multiplier effects of these losses emanating from the timber industry resulted in additional declines averaging -US$2.56 million in value added and -45.6 jobs across the state economy on the drop in output of -US$4.51 million. The total economic effects summed to -US$3.44 million in value added and -87.1 jobs on output declines of -US$9.46 million.

Prices and Taxes for Oil and Oil Products in the Context of Long-Term Development of Russia

The article considers issues related to prices, taxes, and export duties for oil and oil products in Russia and foreign countries. The act adopted in August 2018 related to the gradual (within 6 years) cancellation of export duty on oil with the corresponding increase in severance tax (ST) is analyzed. This will lead to the growth of domestic prices for oil and oil products, as well as rise in inflation, and will have an adverse impact on economic growth rates (This will result simultaneously in the rise in prices for oil-importing EAEU countries. The rates of oil and diesel fuel price growth in Russia significantly exceed the inflation rate in 2018). The comparative analysis of the structure of prices for gasoline in Russia and the United States, as well as prices for oil and diesel fuel in countries throughout the world in 2018, are given.

Unconventional energy, taxation, and interstate welfare: An analysis of Pennsylvania's severance tax policy

Natural gas production from unconventional sources has increased over the past decade. A significant portion of this increase has come from output in the Marcellus region of Pennsylvania. This output has altered gas markets and repositioned Pennsylvania as a major gas exporter. It has also put Pennsylvania at odds with other states as it is one of a few without a formal severance tax on extractive resources. In this paper, we combine results from a structural demand model with a two-sector trade model to analyze the interstate welfare impacts of Pennsylvania's current severance tax proposal. Our results demonstrate that most of the welfare losses from this proposed policy are likely to be shifted to residents in other states. We also demonstrate how fluctuations in gas prices can substantially reduce tax revenue. These findings have important implications for both Pennsylvania and U.S. energy policy given the significant rise in energy production from new sources throughout the U.S.