Gross Production Tax

AAA

DEFINITION of 'Gross Production Tax'

A state tax imposed on companies that generate revenues by depleting non-renewable resources. Such companies include producers of oil and gas, coal miners and miners of metals and minerals. Gross production taxes are normally introduced as a means of compensating the state for the pollution that miners emit.


Also known as severance tax.

INVESTOPEDIA EXPLAINS 'Gross Production Tax'

One method of calculating the gross production tax is as a percentage of gross value based on the average monthly product price. This tax is generally deductible from the company's federal tax. Some states may also charge an extraction tax on top of the gross production tax.

RELATED TERMS
  1. Taxes

    An involuntary fee levied on corporations or individuals that ...
  2. Nonrenewable Resource

    A resource of economic value that cannot be readily replaced ...
  3. Double Taxing

    A tax law that causes the same earnings to be subjected to taxation ...
  4. Corporate Tax

    A levy placed on the profit of a firm, with different rates used ...
  5. Severance Tax

    A tax imposed on the removal of nonrenewable resources such as ...
  6. Guideline Premium And Corridor ...

    A test used to determine whether an insurance product can be ...
RELATED FAQS
  1. Who developed the theory of economic externality?

    British economist Arthur C. Pigou advanced the theory of economic externalities, which he most notably expressed in his book, ... Read Full Answer >>
  2. Who first came up with the idea of a progressive tax?

    Theodore Roosevelt was the first U.S. president to call for a progressive income tax, which he encouraged Congress to pass ... Read Full Answer >>
  3. Is progressive tax the same thing as marginal tax rate?

    A marginal tax rate is a form of a progressive tax. Any progressive tax is a tax created based on the amount of income an ... Read Full Answer >>
  4. What are the pros and cons of a progressive tax policy and who benefits the most ...

    Those who oppose a progressive tax hierarchy are likely to be those who pay more taxes when such a policy is in place. A ... Read Full Answer >>
  5. Do all taxes create deadweight loss?

    Taxes create deadweight loss because they prevent people from buying a product that costs more after taxing than it would ... Read Full Answer >>
  6. What's the difference between regressive and progressive taxes?

    The U.S. federal tax system and local and state tax systems are complex in that they combine progressive, regressive and ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Oil: A Big Investment With Big Tax Breaks

    Oil and gas investments can provide unmatched deduction potential for accredited investors.
  2. Active Trading

    Oil And Gas Industry Primer

    Before jumping into this hot sector, learn how these companies make their money.
  3. Mutual Funds & ETFs

    Investing In Oil And Gas UITs

    Unit investment trusts provide direct exposure to the energy sector, fueling better returns.
  4. Fundamental Analysis

    Accounting For Differences In Oil And Gas Accounting

    How a company accounts for its expenses affects how its net income and cash flow numbers are reported.
  5. Taxes

    Top 4 Ways to Invest Tax Free

    When you're ready to invest, start by looking at these 4 tax-advantaged ways to build your portfolio and your future.
  6. Taxes

    Missed The Tax Return Deadline? Here's What To Do

    Most important: Do it now.
  7. Personal Finance

    Weak Oil, Sanctions' Bite, Mean Misery for Russia

    Low oil prices, coupled with crippling sanctions, will mean Russia will suffer declining growth and vicious inflation for at least the next two years.
  8. Forex Education

    For Now, a Future Without Putin Seems Unlikely

    Putin's actions have alienated the West and led to harsh economic sanctions against his country, but his favorability remains high at home.
  9. Taxes

    Are Taxes the Solution for Income Inequality?

    Income inequality continues to increase. Why? And are taxes the solution?
  10. Stock Analysis

    Top 6 Gas Stocks that Pay Regular Dividends

    A look at the top 6 dividend paying gas stocks.

You May Also Like

Hot Definitions
  1. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  2. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  4. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  5. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  6. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center