Royalty relief is not a tax break

ryanteaguebeckwith — Mon, 11 Aug 2008 11:08:58 -0400

A recent TV ad attacking U.S. Sen. Elizabeth Dole argues that she has voted to give oil companies "billions ... in tax breaks."

But experts say that one of the measures cited in the ad is not exactly a "tax break."

The ad refers to the 2005 energy bill, which included extensions of a measure to allow oil companies to avoid paying the standard 12 percent royalty when drilling in the Gulf of Mexico.

Erich Pica, a researcher on oil issues for the Friends of the Earth, is not a fan of royalty relief, but he says he would not classify it as a "tax break" either.

"I tend to be very specific when I'm talking about tax breaks versus general subsidies," he said. "I consider (royalty relief) more of a subsidy," he said.

Taxes are levied on all corporations or individuals based on their activities, while a royalty is a specific charge for the use of a government resource.

Mark Holt, author of a Congressional Research Service report on the energy bill, said he did not consider royalty relief to be a tax break in his analysis.

newsobserver.com projects - Royalty relief is not a tax break - Comments

Royalty relief is not a tax break