Oil tax trigger take effect, thanks to higher prices on crude
North Dakota’s oil tax rate increased one percent this week – due to high oil prices.
In 2015, the Legislature voted to lower the oil tax rate – as set by Measure Six, passed by voters in 1980 – from 11.5 percent to 10 percent. But the bill had a trigger mechanism – so that if the price went above a certain point for three consecutive months, that tax would go to 11 percent.
That happened this week.
"At this point in time, the trigger will be in effect for the months of June, July and August," said North Dakota Tax Commissioner Brian Kroshus. "That is a certainty."
Kroshus said whether it extends into September and October will be based on June pricing. And he said prices so far in June are $114 to $116 per barrel.
"With a strong start to June, in terms of pricing, it's conceivable that the trigger will remain in effect for more than just the next three months," Kroshus said.
For the effect on North Dakota oil tax revenues, Kroshus said it would mean $31 million to $32 million in additional revenue — thus far.
Kroshus said if oil prices fall below the target price for a three month period, the tax would revert back to 10 percent.