Sales tax on mineral well services.

05LSO-0220.C1

                                                         

FISCAL NOTE

 

The fiscal impact, in the form of decreased revenues, is indeterminable.

 

The SIC code for Oil and Gas field services is #1380 and the tax collected under that SIC code reported sales and use tax was $54,890,113 for Fiscal Year 2004.  The problem is that the coding does not distinguish between taxes paid on sales of tangible property from sales of services performed in the field.  Without a breakout of services from the sales of TPP we cannot accurately determine the impact of this bill.  It is also important to note that a number of services that were taxed under Section K of the statutes would also be taxed after the repeal proposed in the bill. Consultation with the Department of Audit regarding the service component of oil and gas services produced a figure which helps in determining how much of the billings done by oil and gas service providers relates to labor but it does not distinguish how much of that labor would continue to be taxed after the repeal.  We cannot accurately determine the fiscal impact of repealing Section K but the worst case scenario is the entire $54,890,113 currently reported.

 

Prepared by:   Dan Noble, Dept. of Revenue      Phone:   777-5220