Influence of Oil and Gas on Local Sales and Use Tax Receipts: Evidence from Oklahoma Panel Data
Abstract
Purpose: Recent volatility in the oil and natural gas markets has led to questions about how local government revenues might be affected. This paper attempts to quantify the relationship between changes in oil / natural gas production and local sales / use tax collections. Methods: Panel data for 73 Oklahoma counties over 2003-2012 is used for the analysis. This includes oil and natural gas production value, sales/use tax collections by SIC code, number of well completions, and control variables such as unemployment and median household income. A fixed effect panel regression model is used to reveal relationships between energy production and sales / use tax collections as a whole and by SIC code. Findings: Preliminary results suggest that after controlling for time and fixed effects, an increase in oil and natural gas production is not associated with a corresponding increase in overall retail sales tax collections. However, sales tax collections for specific SIC codes such as those for food, fuel, and furniture, are affected by the number of oil and natural gas well completions and the value of natural gas production in a county.Conclusions: The data shows that recent increases in Oklahoma energy production have had a positive effect on local sales tax receipts, with some sectors benefitting more than others.
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- OSU Theses [15752]