ConocoPhillips opposes Washington County use tax

Friday, June 27th 2003, 12:00 am

By: News On 6

BARTLESVILLE, Okla. (AP) _ ConocoPhillips Corp. wants Washington County officials to rescind a tax aimed at bringing in additional money for services.

The Bartlesville City Council considered a 3% use tax last month shortly after the county commission approved one but city officials defeated it after the petroleum giant complained it was would unfairly affect the company's business.

The use tax generates money from interstate transactions. ConocoPhillips' Bartlesville operation collects use taxes on items the company sells to subsidiaries and other companies worldwide. The amount of use tax collected is based on a percentage of the sale.

``Our global support center is based in Bartlesville. This is where we license all our software for our company, and we purchase most of it out of that center in Bartlesville,'' ConocoPhillips spokesman Rich Johnson said.

``These proposed use taxes would have a significant impact on the cost for our tools.''

The county's half-percent tax would generate a combined $600,000 a year from the city's three largest businesses, Johnson said.

City and county officials said the other two largest employers in Bartlesville _ Schlumberger and ABB _ haven't discussed the tax with either the city or county.

Oklahoma has a 4.5 percent state sales and use tax rate, but cities and counties can make additions. Most of the governments in Oklahoma impose a use tax at the same rate as the local sales tax.

``Washington County is no different than other counties,'' County Commissioner Jim Sheetz said. ``We incarcerate prisoners and maintain roads and bridges.

``We keep having to do more and more things that cost the county money, and we have no particular source to increase funding.''

Operating the county jail has increased from $400,000 a year to $650,000 because of new state regulations, he told The Daily Oklahoman.

Businesses in Bartlesville pay less in use taxes than in other cities where ConocoPhillips does business.

The use tax rate in Houston is 8.25 percent. In Ponca City, sales are taxed at 7.5 percent, while the rate is 7.917 percent in Tulsa and 8.375 in Oklahoma City.

``Houston does have that tax, but we purchase all of the software licenses and a large portion of the computer equipment used by the company in Bartlesville because it does cost less there,'' ConocoPhillips' Johnson said. ``But obviously, if more use taxes are passed, that increases our cost of doing business in Bartlesville.''

Bartlesville was home to Phillips Petroleum Co. until September, when the company merged with Conoco Inc. and moved its headquarters to Houston. ConocoPhillips has maintained most of its operations and about 2,400 employees in Bartlesville.

Johnson said he wouldn't go so far as to say ConocoPhillips would consider relocating operations because of the tax.

``I'm not going to specify what that would mean, but every business has to evaluate its cost structure,'' he said.

The county commissioners will discuss the tax again next week, but because it has already been enacted a new resolution would be required to revoke the fee, Sheetz said.

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