August 12, 2007 10:19 PM UTC

Colorado's Law-and-Order Dems Target Energy Industry Tax Loophole

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• by: davidsirota

Last week over at the Denver Post’s PoliticsWest site, I pointed out how, in the wake of the Minnesota bridge disaster, many conservatives seem eager to berate any calls to even consider modest tax increases to repair and rejuvenate America’s crumbling infrastructure. I also pointed out how, in the face of enormous state and federal tax gaps, many of these same conservatives have opposed efforts to collect the taxes that are already owed. Fortunately, that prompted conservative Denver Post columnist David Harsanyi to say he agrees that “everyone should follow the law” and that yes, “if you owe taxes, pay up.” It was a very encouraging and timely statement, because here in Colorado, it looks like we’re about to see this debate play out in real life, and the more conservatives who join Law-and-Order Democrats in their push to strengthen tax enforcement, the better.

The Greeley Tribune reports today that thanks to a push by Colorado’s Law-and-Order Democrats, “Legislative changes might be coming next session that could mean a windfall [in tax revenues] after lawmakers and a state working group learned Colorado is losing out on millions of dollars in unpaid severance taxes.” Yes, “despite booming revenues from oil and gas extraction in Colorado, counties are not getting all they should from the people mining the state’s natural resources, according to the state auditor.”

The controversy revolves around the severance tax, which is, according to the Tribune, “a payment by companies that extract oil or gas from Colorado” and whose revenue “is [partly] spent on grants to local governments where the resources are coming from, and [partly] goes to a trust fund to pay for water projects and other natural resource efforts.”

As Colorado Confidential reported last month, Colorado taxpayers are owed roughly $40 million in severance taxes that the energy industry has not paid. Republican Attorney General John Suthers seems to agree, noting in a July 2007 memo that the unilateral decision by Colorado’s Department of Revenue to freeze the severance tax by citing the so-called Taxpayer Bill of Rights (TABOR) was illegal. Now, Law-and-Order Democrats in the Colorado Legislature have launched an investigation that could lead to better tax enforcement.

The coal industry and oil and gas industry spends heavily on state legislative races throughout the country, and funnels most of its cash to Republican candidates. That means this push by Law-and-Order Democrats is going to put Colorado Republicans on the spot: Will they go to bat for their Big Energy campaign contributors, or will they go to bat for the communities (many in heavily Republican areas) that are being bilked and that are desperate for more investment in local infrastructure?

If Republicans here are anything like they are up in Montana, they’ll go to bat for their campaign contributors against local communities, and oppose this tax enforcement initiative by Law-and-Order Democrats. Then again, a Republican, State Rep. Jerry Sonnenberg (R-Sterling), is – for now – involved in leading the investigation. Additionally, if Colorado’s leading conservative columnists like Harsanyi stay true to their word of supporting basic tax enforcement and use their platform to get the word out about the rip-offs that are happening now, maybe the dynamic will be different here. Stay tuned.

Cross-posted from Working Assets