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Alaska Losing $1.5 Billion Per Year On New Oil Tax Say Expert Documents


July 21, 2007

(SitNews) - Friday three legislators shared with the public several documents demonstrating how Alaska is being short changed under the current oil tax structure. The net profits tax that was passed under the cloud of corruption is costing the state billions according to information from experts hired by the state during last year's oil tax debate. As the state considers a special session to fix Alaska's broken oil tax system, debate is centering on whether last year's law is fair to Alaskans. The attached expert documents and information in the state's possession indicate Alaskans are being shortchanged by roughly $1.2 to $2 billion each year.

The recent FBI investigations into corruption, already producing guilty pleas and one conviction relating to bribery and conspiracy, cast the current oil tax regime into serious doubt. Today legislators who've sponsored oil tax reform efforts in the Legislature are sharing documents with the public to inform a stronger public discussion.

"We already know from our experts that Alaskans are being shortchanged by last year's oil tax," said Rep. Les Gara (D-Anchorage). "The debate shouldn't be about whether we're being short changed, but about how we're going to fix this problem. Gara is a prime sponsor of HB 89, which would fix Alaska's oil tax that was held up from a vote in the House Oil and Gas Committee, Chaired by Former Rep. Vic Kohring (R-Wasilla).

"If we don't fix this tax in special session this year, Alaskans may stand to lose another $2 billion. That would be irresponsible," said Sen. Bill Wielechowski (D-Anchorage). Wielechowski has sponsored parallel Senate oil tax reform legislation, SB 175, with Senators' Hollis French (D-Anchorage.), Kim Elton (D-Juneau) and Johnny Ellis (D-Anchorage).

The House bill is sponsored by Reps Gara, Harry Crawford, Bob Buch (D's-Anchorage), and David Guttenberg (D-Fairbanks). Gara, French, Crawford, and others have led the fight for oil tax reform since 2004, when it because obvious the state was being shortchanged in a world of high oil prices and excessive oil company windfall profits.

"With the record-high oil prices, it's more imperative then ever that we reexamine our oil taxes," French said.

The Information from world oil tax consultant Daniel Johnston, and consultants EconOne and Wood Mackenzie, all hired by the legislature, shows:

  • The World Average Tax, measured in what experts call "Total Government Take" is roughly 67 ­ 73 percent.
  • The "Total Government Take" On Alaska oil, at current oil prices, is much lower, at roughly 61 percent.
  • Each percent the state reduces it's "Government Take" costs roughly $200 million in lost oil tax revenue.
  • With a Government Take between 6 and 12 percent below the world average, the state is losing between $1.2 and $2 billion per year.

In January Gara asked the State Department of Revenue to help update this analysis comparing Alaska's tax with rates charged elsewhere in the world. The Department is appropriately looking into that information to update and refine this analysis.

Gara, French and Wielechowski are working to highlight the expert information the state already has on this subject as Alaskans question whether the Legislature needs to go into special session this fall to fix Alaska's oil tax. According to FBI indictments and released testimony, at least 5 legislators who voted on last year's oil tax allegedly received illegal payment offers from VECO or other company executives.


On the Web:

Download the Documents

Source of News:

Office of Rep. Les Gara


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Ketchikan, Alaska