Severance tax
Encyclopedia
Severance taxes are incurred when non-renewable natural resources
are separated (or severed) from a taxing jurisdiction. Industries that typically incur such taxes are oil and gas
, coal
, mining
, and timber
industries.
Non-renewable resource
A non-renewable resource is a natural resource which cannot be produced, grown, generated, or used on a scale which can sustain its consumption rate, once depleted there is no more available for future needs. Also considered non-renewable are resources that are consumed much faster than nature...
are separated (or severed) from a taxing jurisdiction. Industries that typically incur such taxes are oil and gas
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
, coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
, mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
, and timber
Timber
Timber may refer to:* Timber, a term common in the United Kingdom and Australia for wood materials * Timber, Oregon, an unincorporated community in the U.S...
industries.