The Future of West Virginia’s Severance Tax
In West Virginia a 5% tax is imposed on those engaging in the extraction of coal, oil, gas and other natural resources from the lands of the state. This is the “severance tax.” While the tax is ostensibly on the privilege of engaging in the business of extraction, the tax is calculated based on the volume of production. The state’s oil & gas industry is now booming even though coal is in the midst of a long-term decline. Most analysts believe both these trends are likely to continue for decades. So the future is bright for the state’s budget if we manage our oil & gas patrimony carefully.
