Gross Production Tax
Categories: Tax, Company Management
The gross production tax is a tax that states impose on businesses that make money through depleting non-renewable resources; also called a severance tax.
Companies hit with gross production taxes include oil producers, natural gas producers, coal miners, and metal miners.
From an economic accounting perspective...which takes into account social costs and social benefits (not just the ones on a company’s balance sheet)...a gross production tax is correcting a market failure by making companies pay for the negative externality they are creating (the negative effects the public deals with and pays for as a result of extracting these limited resources).