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How timber is taxed in Oregon
At one time, Oregon taxed timber through the property tax system. The tax system considered timber as real property and taxed it the same way as other real property. The 1993 Legislature determined that timber is more like an agricultural crop than real property and removed the value of standing timber from the property tax value.
 
Currently, the only timber tax related to property tax is the Small Tract Forestland (STF) Severance Tax. This tax provides for the repayment of property taxes that were delayed until harvest through the STF Program. Only those landowners who have applied and been approved for the STF Program need to pay the STF Severance Tax. Owners in the Forestland Program do not pay a severance tax.
 
The STF Severance Tax receipts are distributed to the State School Fund, the Community College Support Fund, and the counties that have lands classified under the STF Program. The State School Fund and Community College Support Fund receipts are distributed on or before May 15 of each year. Receipts for the counties are distributed on or before August 15 of each year.
 

 
Revenue distribution

The Forest Products Harvest Tax (FPHT) is a tax applied to timber harvested from any land in Oregon, except most tribal lands. It was established to recover portions of the state's costs related to forest protection and forest research or to provide funding to improve public understanding of the state's forest resources. Revenues are distributed quarterly to:
1. Administration of Oregon's Forest Practices Act
The Oregon Forest Practices Act encourages forest management that protects forest resources including soil, air, water, fish, and wildlife resources. It also helps preserve scenic resources along visually sensitive corridors and reduces the risk of injury or death from landslides directly related to poor forest practices. Currently, the FPHT covers 40 percent of the cost of administering this law. The state General Fund pays the other 60 percent.

 
2. Development of forestry research through Oregon State University
Oregon State University supports forestland owners in Oregon by providing forestry research through the Oregon Forest Research Laboratory (FRL). The FPHT receipts provide approximately 10 percent of the research budget for the FRL.

 
3. Establishment of the Oregon Forestland Protection Fund
The Oregon Forestland Protection Fund serves as kind of an "insurance policy" against wildland fires that are beyond the capability of the local district fire protection forces. The FPHT receipts provide 50 percent of the budget for this fund. The state General Fund pays the other 50 percent. 

 
4. The Oregon Forest Resources Institute
The Oregon Forest Resources Institute (OFRI) was created in 1991 to improve public understanding of the state's forest resources. OFRI provides information on Oregon's forest practices and encourages sound forest management. The institute is 100 percent funded by the Forest Products Harvest Tax.