Spend any time in Colorado this election season and you’re sure to see at least one erroneous advertisement warning consumers about the “$321 million tax hike,” should they vote for Amendment 58, which would end state tax credits to a wealthy oil and natural gas industry and invest the money in education and renewable energy.
As one of the top natural gas producers in the West, Colorado, and its wild landscapes and local communities, have undergone dramatic changes as part of a drilling boom that exploded during the Bush administration.
The choice before Coloradans now is simply whether to ask oil and natural gas companies to pay their share of the taxes for the profits they reap from the ground and invest those funds directly into the state’s future.
If Amendment 58 is passed, funds raised by ending tax favors would be invested in college scholarships, renewable energy and Colorado’s clean-energy economy, and funding to help mitigate the impacts of oil and natural gas development on local communities and wildlife.
These are undeniable benefits for the state, yet anti-Amendment 58 ads prefer to peddle the myth that tax increases would be passed to consumers through higher heating bills.
In truth, Colorado’s Amendment 58 would simply close the tax loophole which has resulted in Colorado giving the oil and natural gas industry massive tax breaks each year – last year totaling $321 million., This so-called “tax hike” would be paid by the industry, not by consumers, directly or indirectly.
The distortions of industry-backed ad campaigns are alarming, but state media organizations and policy institutes are properly calling the claims false.
Colorado’s Bell Policy Center, for instance, recently called such claims “scare tactics.” The Bell’s policy brief on Amendment 58 correctly points out, as state news media are doing, too, that gas prices are determined by supply and demand, not by such taxes.
The Rocky Mountain News cited another recent study, this one from Montana-based Headwaters Economics that demonstrates that Amendment 58 would not affect investment. The report cites Alaska and Canada as having raised taxes on the industry without losing investment dollars.
"The oil and gas industry is dependent on natural resources, and it can't just pick up and move to another state if they don't like the tax policy of the state which has the natural resource," the newspaper quoted Mark Haggerty, author of the study titled Energy Revenue in the InterMountain West.
Colorado’s corporate subsidies were established decades ago when the oil and natural gas industry was struggling in the state. Today, Colorado has one of the lowest severance taxes in the West, while its communities struggle to deal with the impacts of the current drilling boom.