Speeches delivered by Pat M. Neff, Governor of Texas, discussing certain phases of contemplated legislation Page: 27 of 61
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annually from its mineral deposits two and one-half million
dollars. In Minnesota an occupation or privilege tax is levied equal to
six per cent of the value of all ores mined. This is in addition to all
other taxes. The revenue from this source exceeds two million dollars
per annum. In addition the mining properties of Minnesota pay an ad
valorem tax in excess of eighteen million dollars per annum. In Oklahoma
a tax is levied, equal to three per cent of the value of all oil produced
over royalties; machinery and derrick at the well untaxed.
There exists, of course, no way of making with any degree of accuracy
an appraisal of our State's stored economic wealth, hence in its undisturbed
state there can be no fair valuation. The one course to pursue,
is for the State, under the provisions of carefully prepared severance
laws, to secure just division of realized income fowing from this peculiar
character of property. What is said of oil is equally applicable to gas,
sulphur, coal, and other minerals so abundantly stored by nature under
the soil of Texas.
The provisions of the Texas statute with reference to oil wells provide
for a tax, measured by value of production, of one and one-half
per cent, computed upon the average market value thereof. It will be
noted that the tax is considerably less than in Oklahoma. In Louisiana
in addition to the tax on production, the State Tax Commission obtains
the settled production of producing wells as of January 1st, of each
year, and by multiplying this with the current selling price as of like
date, fixes the result by capitalization as the assessment to be added to
the ordinary value of the land. This is, of course, the application of
the severance tax. Also, it is a reminder that vast taxable values are
going untaxed in Texas.
Under the language of our Texas statute imposing a tax of one and
one-half per cent of the average market value thereof, it has become
the practice to fix a posted price and in addition thereto pay a bonus
of 25 cents to 80 cents per barrel. Under the ruling, the posted price is
construed as the average market value. When the posted price of $1.50
per barrel plus a bonus of 50 cents is paid, it would seem that $2 becomes
the market value. The revenue to the State arising from this source
for the fiscal year ending August 31, 1921 was $3,568,974. For the
year ending August 31, 1922, it totaled $2,441,731.70, a decrease under
the preceding year of $1,127,242.41. During this same year Oklahoma
received $3,492,487. And, too, this is but one of the several instances
in which the State fails to realize its expectant revenue. It requires
but an analysis of the operation of our tax laws, or rather the inefficiency
of such laws, for us to understand why the State Treasury is
now operating on a deficiency. A severance tax, whether imposed upon
value reached by capitalizing earnings or upon gross production, is far
more equitable than is the property tax, inasmuch as in every instance
and before the tax adheres, both volume, value and income of the taxable
is known. Clearly it is well within the class of subjects having
ability to pay. This cannot be said of land which must pay upon
assessed valuations whether earning income or not.
We have a statute providing for the levy of a tax equal to two per
cent of their gross receipts upon wholesale dealers in coal-oil, benzine,
naphtha, gasoline, and other products refined from petroleum. Within
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Neff, Pat M. Speeches delivered by Pat M. Neff, Governor of Texas, discussing certain phases of contemplated legislation, book, 1923; Austin, Texas. (texashistory.unt.edu/ark:/67531/metapth5835/m1/27/: accessed March 28, 2017), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; .