Oil Tax Credits
By Rep. Dan Ortiz
May 18, 2017
The Senate’s priority is loud and clear: oil companies. The Senate’s revision of HB 111, “Oil and Gas Production Tax,” works only for oil companies while leaving Alaskans worse for the wear.
Originally, the House version of HB 111 reduced the base tax rate on oil from 35% to 25% to encourage increased exploration and development on the North Slope. It protected Alaskans during low oil prices by hardening the minimum tax floor. The House version was projected to bring an additional $20 million in new revenue during FY2018 and an estimated $475 million per year by FY2027. We would be receiving a fair share of the resource we own.
In contrast, the Senate version creates additional opportunities for oil tax credits to be used to reduce tax payments below the 4% minimum floor. That action alone will cost the state between $10 and $45 million per year. The bill overall is projected to raise no additional revenue in FY2018.
In addition to those increased costs and lack of immediate revenue, the Senate budget appropriates a large amount of money to oil companies for oil tax credits. The Senate budget plan includes $74 million in the operating budget and $288 million in the capital budget for oil tax credit funding. In total, that is $362 million of this year’s budget going directly to the oil companies!
Alaskans would pay the oil companies nearly $1 million per day.
When we take into consideration the oil tax credits, the Senate budget calls for more government spending than the House proposed budget plan. Meanwhile, the Senate has also called for devastating cuts that would negatively impact our seniors and children, making me wonder if they believe protecting the oil industry is more important than our Pioneer Homes and our schools.
The Senate made these changes under the guise of ‘keeping Alaska competitive.’ In reality, Alaska is the only state in the U.S. – and one of the few places in the world – where oil companies made money in the last year.
Alaska’s oil and gas tax structure currently puts Alaska and its residents at a disadvantage, particularly under low oil prices, which we are experiencing now and which are expected to continue. We need to reform the system in order to work for the people of Alaska while keeping Alaska competitive.
Rep. Dan Ortiz
Received May 17, 2017 - Published May 18, 2017
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