Legislation could hit Oklahoma aggregate producers hard

January 14, 2014

Aggregate producers in Oklahoma could face a tax rate of up to seven percent if a proposed bill passes the state legislature. The bill, HB 1876,
would allow counties to tax aggregates producers up to 7 percent for the production of silica, sand, gravel and more, NewsOK reported.

The bill would allow each county to tax aggregates production at a different rate up to 7 percent. Rep. Charles McCall (R-OK) created the bill, which he says “is designed to mirror the Oklahoma gross production tax.”

“In a lot of areas of the state, we have nonrenewable resources leaving the state with very little financial benefit to the areas where those natural resources are severed,” McCall said.

Opponents of the bill worry it would be difficult to keep track of the taxes.

“It would also create an imbalance within our industry, having materials counted one way in one county and another way in a neighboring country,” says Jim Rodriguez, executive director for the Oklahoma Aggregates Association.

Rodriguez is also concerned that the bill would drive up production costs. Compared to Arkansas’ 4-cents-per-ton severance tax, the proposed Oklahoma tax would translate up to 42 cents per ton, he told NewsOK.

“This is a high-volume, low-cost product,” Rodriguez says. “What happens when you significantly increase the cost of a low-cost item that is produced in high quantities?”

Oklahoma County Commissioner Ray Vaughn said the tax would go toward funding roads with heavy truck traffic.

“The initial issue was that in those counties, especially where those big mines are located, they don’t have the funds to keep up with maintenance of the roads and bridges,” he says. “They were looking for a funding source to take care of the roads and restore them.”

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