UNAPPROVED DRAFT BILL -- Subject to Change Without Notice!
BILL NO.
INTRODUCED BY
(Primary Sponsor)
A BILL FOR AN ACT ENTITLED: "AN ACT PROVIDING A PHASED-IN INCREASE OF THE COAL SEVERANCE TAX IMPOSED ON THE PRODUCTION OF COAL HAVING A HEATING QUALITY THAT IS EQUAL TO OR GREATER THAN 7,000 BTU PER POUND OF COAL; ALLOWING REDUCED TAX RATES ON THE PRODUCTION OF COAL THAT IS USED BY AN OWNER OF A GENERATION FACILITY THAT OFFERS CONTRACTS TO SELL AT LEAST 50 PERCENT OF THE FACILITY'S OUTPUT AT COST-BASED RATES; AMENDING SECTION 15-35-103, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND A RETROACTIVE APPLICABILITY DATE."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 15-35-103, MCA, is amended to read:
"15-35-103. (Temporary) Severance tax -- rates imposed. (1) (a) A severance tax is imposed on each ton of coal produced in the state in accordance with the following schedule:
Heating quality Surface Underground
(Btu per pound of coal): Mining Mining
Under 7,000 10% of value 3% of value
7,000 and over 15% of value 4% of value
(b) The rate of taxation for coal that meets the following conditions is one-third the applicable rate set forth in subsection (1)(a), rounded to the nearest 10th 100th of a percent:
(i) The coal is used for the production of electricity within the state in an electrical generation facility that was constructed after December 31, 2001, and before January 1, 2008.
(ii) The electrical producer agrees to offer, for use within the state, the first one-half of the amount of power that it produces to Montana customers and distribution services providers at a cost to be set by the public service commission that reflects the producer's cost of generating the electricity plus a reasonable return on investment The owner or operator of the electrical generation facility agrees to offer contracts to sell 50% of that facility's net generating output at a cost-based rate, which includes a rate of return not to exceed 12%, to customers for a 20-year period.
(2) "Value" means the contract sales price.
(3) The formula that yields the greater amount of tax in a particular case must be used at each point on the schedule.
(4) A person is not liable for any severance tax upon 50,000 tons of the coal that the person produces in a calendar year, except that if more than 50,000 tons of coal are produced in a calendar year, the producer is liable for severance tax upon all coal produced in excess of the first 20,000 tons.
(5) In addition to the exemption described in subsection (4), a person is not liable for any severance tax upon up to 2 million tons of coal that the person produces as feedstock for coal enhancement facilities in a calendar year, except if more than 2 million tons of coal are produced as feedstock for coal enhancement facilities in a calendar year, the producer is liable for severance tax on all coal produced as feedstock for these facilities in excess of the first 2 million tons. (Terminates December 31, 2005--sec. 5, Ch. 318, L. 1995.)
15-35-103. (Effective January 1, 2006) Severance tax -- rates imposed. (1) (a) A severance tax is imposed on each ton of coal produced in the state in accordance with the following schedule:
(i) after December 31, 2005, and before January 1, 2007:
Heating quality Surface Underground
(Btu per pound of coal): Mining Mining
Under 7,000 10% of value 3% of value
7,000 and over 15% 20% of value 4% of value
(ii) after December 31, 2006, and before January 1, 2008:
Heating quality Surface Underground
(Btu per pound of coal): Mining Mining
Under 7,000 10% of value 3% of value
7,000 and over 25% of value 4% of value
(iii) for tax years beginning after December 31, 2007:
Heating quality Surface Underground
(Btu per pound of coal): Mining Mining
Under 7,000 10% of value 3% of value
7,000 and over 30% of value 4% of value
(b) The rate of taxation for coal that meets the following conditions is one-third two-thirds the applicable rate rates set forth in subsection (1)(a), rounded to the nearest 10th 100th of a percent:
(i) The coal is used for the production of electricity within the state in an electrical generation facility that was constructed after December 31, 2001, and before January 1, 2008.
(ii) The electrical producer agrees to offer, for use within the state, the first one-half of the amount of power that it produces to Montana customers and distribution services providers at a cost to be set by the public service commission that reflects the producer's cost of generating the electricity plus a reasonable return on investment The owner or operator of the electrical generation facility agrees to offer contracts to sell 50% of that facility's net generating output at a cost-based rate, which includes a rate of return not to exceed 12%, to customers for a 20-year period.
(2) "Value" means the contract sales price.
(3) The formula that yields the greater amount of tax in a particular case must be used at each point on the schedule.
(4) A person is not liable for any severance tax upon 50,000 tons of the coal that the person produces in a calendar year, except that if more than 50,000 tons of coal are produced in a calendar year, the producer is liable for severance tax upon all coal produced in excess of the first 20,000 tons."
NEW SECTION. Section 2. Effective date. [This act] is effective on passage and approval.
NEW SECTION. Section 3. Retroactive applicability. [This act] applies retroactively, within the meaning of 1-2-109, to coal production occurring after December 31, 2004.
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