Consumer Watchdog to Brown: Add Oil Extraction Tax to Budget

$1 Billion Annual Revenue Should Not Be Left On the Table While Services, Education Are Slashed, Says Group

SANTA MONICA, Calif., Jan. 12, 2011 /PRNewswire-USNewswire/ -- In a letter to Gov. Jerry Brown Wednesday, Consumer Watchdog asked Brown to add a petroleum extraction tax or fee to his state budget, bringing the state an additional $1 billion or more in annual revenue to soften draconian cuts.

"An extraction tax, of the type that every other oil state in the U.S. collects, is money on the table and California can't afford to leave it there," said Judy Dugan, research director of Consumer Watchdog. "Voters facing crippling cuts to higher education and the state's social safety net will turn a deaf ear to the industry's whining and threats, as the companies make outrageous profits on oil at $90 a barrel."

See the entire letter at: http://www.consumerwatchdog.org/resources/brownoiltaxltr01122011.pdf.

The letter to Gov. Brown said:

"Your tough-mindedness is evident in both the steep cuts and tax proposals in your budget. Yet one of the most obvious sources of new revenue is absent. We urge you to add a petroleum extraction tax to your budget proposals, which would provide the state with more than $1 billion annually even at a modest single-digit tax rate. 

"California is the only major oil-producing state that doesn't apply a set fee to the extraction of oil from state lands. Alaska gets an astounding 25% tax on the market price of every gallon. Texas, Louisiana, Oklahoma—you name it—all get dollar or percentage amounts off the top. …

"California currently heaps extra tax breaks on its largest companies, including Chevron. And the state taxes corporations at a lower rate, measured by percent of economic activity, than Texas.

"The only thing holding back an oil extraction tax—perhaps the only tax that Californians could widely agree on—is the oil lobby. And didn't the November defeat of Proposition 23, an oil-backed proposition to curb green energy, show that Californians are willing to push back against Big Oil when they know the stakes?"

The state Legislature has repeatedly failed to pass an extraction tax, said Consumer Watchdog, due to the two-thirds vote requirement for taxes and the muscle of the oil lobby.

"Gov. Brown, only days into his term, is uniquely positioned to face down the oil bullies and their ideological kin in the Legislature," said Dugan. "He owes it to the state's universities, and its weakest citizens, who will lose care and treatment."

Consumer Watchdog is a leading nonprofit, nonpartisan consumer advocacy organization with offices in Santa Monica and Washington. For more information, see www.consumerwatchdog.org and www.oilwatchdog.org.

SOURCE Consumer Watchdog