Pot Projected to Raise More Money than Flawed Oil Tax in the Near Future
Unsustainable and Flawed System of Subsidizing the Oil Industry Must be Part of Plan to Solve $4 Billion Budget Gap
May 02, 2016
“When pot raises more than oil production taxes, it’s a siren call that we have to fix a system that lets companies deduct their oil taxes down to almost nothing,” said Rep. Gara. “Current law creates nearly a billion dollars in oil company cash payments for tax credits and deductions this year. That doesn’t make economic sense.”
Rep. Gara has been joined by many lawmaker from both sides of the aisle in calling for meaningful reform to the broken system of subsidizing the oil industry in Alaska.
“It is crucial that we all drop our ideological and party labels, and come together to fix a broken system of unaffordable oil company subsidies,” said Rep. Gara.
The Alaska Department of Revenue estimates that marijuana taxes will raise about the same or more revenue than the Parnell-era 2013 production tax (known as S.B. 21) in two of the next four years. Even if oil prices go up, both Fish and Game license fees and Alaska’s alcohol tax are projected to raise more state revenue than Alaska’s oil production tax in 2018, 2019, and 2020.
Alaska’s production tax on oil and gas is projected to only bring in $15.7 million in 2018. That number drops to just $10.7 million in 2019 and $12.5 million in 2020.
In 2019, Alaska’s marijuana tax is projected to raise $12 million, which is more than the Parnell-era production tax will generate. Production taxes and marijuana taxes are projected to be nearly identical in 2020.
Fishing and hunting license fees raise roughly $20 million a year, which is more than the oil industry is expected to pay in production taxes in 2018, 2019, and 2020.
“Alaska’s vanishing oil revenue is a product of excessive oil and gas company subsidies. These tax credits generate cash payments from the state to corporations. They are also used as tax deductions to reduce production tax payments down to close to nothing,” said Rep. Gara. “So far this session, no bill to put in place meaningful oil tax credit reform has passed.”
Edited by Mary Kauffman, SitNews
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