Gross Production Tax Law and Legal Definition

Gross production tax is a state tax upon the gross production of certain industries which is substituted for and takes the place of an ad valorem tax imposed under general tax laws. It is a tax in lieu of all other taxes on the leases and minerals or the equipment used in producing or in the operation of oil wells or mines. In other words, the gross production tax is an "in lieu" tax, that is, it is substituted for and takes the place of what the general revenue statutes would otherwise fasten an ad valorem tax upon. [New England Oil & Pipe Line Co. v. State Board of Equalization, 121 Okla. 277 (Okla. 1926)].