FOR IMMEDIATE RELEASE: April 22nd, 2015
Oil Tax Numbers Get Worse: Alaska Now Paying Oil Companies $640 Million More Than We Get Back In Production Taxes
Revenue Loss Under Production Tax Grows From Estimated $500 million to $640 Million Under Latest Department Report
JUNEAU— Last fall the Department of Revenue estimated the state would give oil companies $500 million more in tax credits than the state gets back in production tax revenue in this fiscal year and next year. Things have now gotten worse. The Department’s latest spring report shows the state’s 2013 Oil Production Tax gives oil companies $640 million more in tax credits than we get back on Production Taxes.
Senator Bill Wielechowski (D-Anchorage) says these numbers show a more urgent need for the Legislature to act on emergency legislation to protect Alaska in times of depressed oil prices. Legislation filed by Senator Wielechowski and Representative Les Gara (D-Anchorage), SB 96 and HB 174, would raise $1.4 billion in additional revenue over 2015-2016. The legislation also includes a reduction to some per barrel tax credits and fixes a glaring giveaway for all future and post-2002 oil fields that a leading economist admits results in negative or near zero net present worth to Alaskans for our production taxes.
“We think the most glaring flaws in that tax, which produce minimal or negative worth for Alaskans, should be fixed now. Sitting by and watching our deficit grow is like standing still in a house that’s on fire,” said Senator Wielechowski.
One feature, to make sure Alaska’s production tax raises more revenue than Alaska gives away to oil companies in tax credits is to raise the current production tax floor from 4% to 12.5% on the state’s largest, most profitable three fields: Prudhoe Bay, Kuparuk and the Colville River Unit. This increase would last for two years, which will give Alaskans time to craft a comprehensive oil tax structure that protects Alaska’s fiscal future and better rebuilds our surplus.
“This bill temporarily fixes a huge flaw in our current oil tax structure,” said Senator Wielechowski. “We have a $3.9 billion deficit and are paying out hundreds of millions of dollars more in credits than we are making in production taxes. This endangers our economy and should be fixed.”
“We can fix the most glaring flaws this session, or leave Alaska on a road to recession. We don’t need to keep cutting teachers when we have better options,” stated Senator Wielechowski.
Senator Wielechowski and Representative Gara, along with many of their Democratic and Republican colleagues, have previously proposed a fairer minimum tax floor similar to what is included in the new emergency legislation. However, those fixes were not adopted into past legislation introduced and signed by former Governor Parnell.
Senator Wielechowski and Representative Gara requested expedited hearings on their legislation.
For more information contact Senator Wielechowski at 465-2435.