Gov. Mary Fallin signed a bill Wednesday for a generous tax incentive for new oil and gas drilling.
“The new 2 percent tax rate is fair to the state and sends a clear message to energy producers worldwide: Oklahoma is the place for energy production and investment.” Fallin said in a statement.
“We want to be a leader in this field not just today but for decades to come.” she said.
Production from new oil and gas wells — both horizontally and vertically drilled — will be taxed at 2 percent for the first three years. After that, production will be taxed at 7 percent, the state’s overall gross production tax rate, according to State Impact.
Oklahoma’s old incentive of 1% enacted in 1994 applied only to horizontally drilled wells for four years. That scheme expires next year.
Republican House Speaker Jeff Hickman of Fairview was the principal author of HB 2562.
Oklahoma Democrats attacked the bill.
Jerry Fent, an Oklahoma City lawyer, may challenge the new bill in the courts.
He told State Impact some provisions in it violate the way revenue bills are supposed to be debated and enacted.