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Houston Chronicle: County assails Shell Oil over lawsuit to avoid $2 million in taxes

Feb. 7, 2006, 1:20PM

A county official assailed Shell Oil Co. today for its lawsuit to avoid paying $2 million annually in county taxes on its local inventory.

Commissioners Court voted to allow the county attorney's office to seek to intervene in the suit and try to prevent Shell from being granted the tax relief.
“Shell Oil doesn't think they have to pay taxes,” Commissioner Steve Radack said.
Shell has sued the Harris County Appraisal District, looking to revisit a 1993 agreement requiring it to pay county taxes on oil and other inventory in a foreign trade zone at its Deer Park complex.
In 2004, Shell had as much as $300 million in inventory in the zone. That would have resulted in about $1.5 million in county taxes.
Shell owes about $2 million in taxes last year on the inventory, said County Judge Robert Eckels.
Shell officials have said the company wants to reopen a discussion about the terms of its foreign trade zone pact with the county. Company spokesmen were not available today for immediate reaction to Radack's comments.
The trade zone was created in 1993 after the county sponsored Shell's application for it in exchange for the company's commitment to pay county taxes on inventory within the zone. The county's sponsorship was needed to get federal approval for a zone.
As a matter of policy, the county has protected its tax base by declining to sponsor applications for firms that won't agree to pay county taxes on their inventory.
The agreement with Shell was to stay in place as long as the county did not let competing oil firms avoid paying taxes on inventory in foreign trade zones created after Shell's pact, Harris County Appraisal District Chief Appraiser Jim Robinson has said.
Shell argues that a competitor is not paying county taxes on its foreign trade zone inventory.
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