From State Impact:
A new ruling this week from Travis County District Judge John Dietz this week could cost the state of Texas billions in tax revenue. Ruling in favor of the drilling company Southwest Royalties, the court found that oil and gas equipment used for exploring and completing wells should not be subject to sales tax because it qualifies for an manufacturing exemption.
The ruling was first reported by the Texas Energy Report, but Dale Craymer of the Texas Taxpayers and Research Association says we’ll have to wait and see.
“The judge has indicated he’s going to rule with the plaintiffs, but we know the state is going to appeal,” he says. “We’ve had instances where plaintiffs have won big judgments in trial court, only to see it be reversed on appeal and vice-versa. This is still very early in what will be a long legal process.”
Craymer says it also depends on how the final ruling is written. It could be broad enough to include billions in tax funds or narrow enough to only affect a smaller amount. Southwest Royalties is owned by Clayton Williams, a Midland oilman known for his failed campaign against Ann Richards for Texas Governor in 1990.
