Coming Court Ruling Could Cost the State Billions

A pending ruling in a Travis County court to exempt oil and gas production equipment from state sales taxes could cost the state as much as $4.4 billion, according the Harvey Kronberg’s Quorum Report.

District Court Judge John Dietz has indicated he plans to rule in favor of a claimant that the manufacturing exemption for sales taxes applies to oil and gas production equipment. According to Kate Alexander’s post on the Austin American Statesman’s Postcards government and politics blog, the State Comptroller estimates exempting extraction equipment could cost the state $2 billion plus interest in refunds. Evidently the impact on the state’s revenue will depend on Dietz’s final ruling – whether it will be broad or narrow. There’s also a good chance the ruling will be appealed.

A copy of the state’s petition in the case is here.

A copy of the petition filed by Southwest Royalties Inc., is here.


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