Arkansas Economic Orgs Unite to Fight Proposed Tax Increase

Eleven Arkansas economic development organizations in six counties came together this month to unveil matching resolutions opposing the proposed increase of the severance tax on natural gas.

“Together these organizations represent more than 5,000 Arkansas businesses,” said Jamie Gates, senior vice president of the Conway Area Chamber of Commerce.
“These communities can testify firsthand to the broad and positive economic impact of the natural gas industry. But they also know it’s a competitive industry and one Arkansas cannot afford to take for granted.”
A proposal to raise the severance tax by 400 percent is currently in the signature-gathering phase to be placed on the November ballot.
The Arkansas legislature significantly raised the severance tax in 2008, which currently collects more than $50 million from Arkansas companies and royalty owners. The organizations formally opposing the increase say that an additional increase will cost Arkansas jobs, revenue and its position within the industry.
“Arkansas has weathered the recession as well as it has almost solely due to the natural gas activity,” said Faulkner County Judge Preston Scroggin. “To try to pull an additional $200 million in taxes from Arkansas companies, land owners and small businesses in this economy is foolish by any standard.
“If passed, it will cost Arkansans jobs and money,” Scroggin said.
The resolutions state that the proposed changes to the current severance tax law would result in a rate “among the highest in the country.”
Many are afraid that the proposal will run off companies and their employees at the worst possible time.
“Natural gas exploration has been one of the few bright spots in an otherwise difficult economy,” said Rich Moellers, chairman of the Morrilton Area Chamber of Commerce board of directors. “The Natural Gas Severance Tax Act proposed by Mr. Nelson would erase the industry’s margins and result in good companies moving operations to other parts of the country where they can make money and provide jobs. This bill is a jobs-killer.”
Earlier this month, the Conway Chamber led an awareness tour that included six stops from Searcy to Fort Smith educating voters, public officials and the media about the negative economic