Discussion about removing a price dependent oil tax hike upsets MHA Nation leadership

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BISMARCK, N.D. - Oil is finally back above $50 a barrel, meaning activity in the Bakken is set to increase in the upcoming months. But if that price keeps rising, taxes could rise on production based on state laws.

A proposed bill being debated in a House Committee would remove all variables from the oil tax collection rate.

Industry leaders say it would provide stability, but some in oil country aren't happy about it.

In 2015, state lawmakers removed a low price trigger, which would have dropped the effective tax on oil production from 11.5 percent to five percent if prices bottomed out.

"Tax policy turns for you or against you sometimes. We understand that. We supported that bill because we want a simplified, predictable rate in which we can make our long term plans going forward," says Ron Ness, ND Petroleum Council.

At the same time, they lowered the effective tax rate to 10 percent and added a high tax trigger to restore the 11.5 percent rate if prices stayed above $90 a barrel. House Bill 1166 would remove that trigger, cementing the rate at 10 percent for all price environments.

"That's not good tax policy to believe that if you make more, you tax more," says Al Carlson, R-Fargo.

But MHA Nation leadership disagrees. MHA Nation Chairman Mark Fox says this would further violate a tax sharing agreement, threatening to either sue the state or void the agreement and put additional tribal tax on oil development on tribal land.

"We are not bluffing. Oil industry please, take that back. We are not bluffing," says Fox.

Fox says even the current 50/50 split doesn't provide the tribe with enough to deal with the effects of oil development on the Fort Berthold reservation.

"This is not the end. This is the beginning of what's going on in the United States, what's going in the world. Recognize that. Recognize that. People of color are not here to be run over," says Fox.

Fox says development will come, regardless of the tax rate.

This was the first discussion on the bill in the House Finance and Taxation Committee. It will be given a do-pass or do-not-pass recommendation by committee members before it heads to the floor for a full vote.