Parnell Proposes Changes to Oil Tax

Dave Donaldson, APRN – Juneau

Monday, Governor Parnell presented a plan to make minor changes in the state’s tax on oil he says would encourage more development of more jobs in new fields.  He says the current tax structure that was passed in 2007 has been effective in improving the state’s revenue.  But conditions have changed, and production needs to be changed, too.

“Given the global recession and declining job opportunities in the oil patch with declining oil production,  we need to do more now than before,” Parnell said. “We need to do more than just grow the state’s savings accounts.”

“It’s not about growing our government, it’s about growing our economy.  Adjustments may be made that will be beneficial to the people of this state over the next several decades.”

The plan is similar to the only tax change introduced by legislators this year by “bracketing” what is called the progressivity tax – the tax rates on oil selling at more than $30 a barrel.  It would be based on the federal income tax system that imposes taxes with varying rates for varying oil prices.  He says that the new “bracket” method would result in a lower effective tax.

Parnell’s plan would also limit the top end of that tax.  He also calls for more tax incentives to encourage development within existing fields and in completely new parts of the state.

The governor says it will reduce the amount of state income.

“It’s clear that our resources are competing in a global market and in the long term this reduction will make the state of Alaska a more desirable place to invest, a greater magnet for those Alaska jobs that we need, and will keep oil flowing in the pipeline for years to come,” Parnell said.

Anchorage Republican Mike Hawker, who sponsored a similar tax for consideration this year, welcomes the governor’s readiness to join the legislative debate on the state’s tax policy.

The session will get underway Tuesday afternoon.