The major oil companies in Alaska testified last night to the state House Resources Committee about the latest version of Governor Sean Parnell’s oil tax reform legislation. The bill passed the Senate last week. It represents a major tax break for the oil companies. The state estimates it will cost Alaska $6 billion in tax revenue over the next five years.
Dan Seckers, a tax expert with Exxon Mobil, says the company is especially happy with the provision of the bill that gets rid of the state’s windfall profits tax:
“To us, this single step represents significant improvement. And this change alone, if you did nothing else to ACES, that change alone would significantly improve Alaska’s global competitiveness,” Seckers said.
But Seckers went on to say the base tax rate under the new tax plan – 35 percent – is too high. Damian Bilboa, head of finance for BP Alaska, agreed the tax breaks under the new plan don’t go far enough.
“While it is a step forward in making Alaska more attractive to investment. Alaska’s geographic, technical and cost challenges are such that Alaska may not want to be satisfied with settling on the upper end of average on the competitive scale,” Bilboa said.
Democrats who fought the new tax plan in the Senate say it gives away billions of dollars to the oil companies, with no guarantee they will invest more in oil production in Alaska to make up for the loss.
Committee co-chair Eric Feige hopes to advance the bill sometime next week. It would then go to the House Finance Committee.