Juneau, Alaska (KINY) - The Senate Rules Committee introduced legislation today to fix several flaws in Alaska’s oil tax structure. Senate Bill 114 would level the playing field by having all oil producers pay the same corporate income tax rate as corporations at 9.4%. This would only apply after the first $4 million in annual net income.
Senate Bill 114 will also reduce Alaska's per barrel oil tax credit system from $8 to $5 and cap the credit amount equal to their capital expenditures. When the legislature debated the current per-barrel credit structure in 2013, modeling focused on oil above $90, not on lower prices like we see today.
Lastly, the legislation establishes "ringfencing" on North Slope fields and changes the law so that producers can only apply their lease expenditures to those fields where the expenditure occurred. With this provision, a company would carry forward their lease expenditures until oil starts flowing. This does not result in a loss of revenue to producers and developers but shifts the time they apply for deductions to when oil starts flowing.
“We are looking for common sense fixes to help stabilize our budget process, and this is one of many proposals that the Senate will evaluate and see how it shapes into closing our fiscal gap,” Senate President Gary Stevens (R-Kodiak) said. “I look forward to the discussion going forward and finding ways to continue providing basic services to Alaskans.”
“Alaska has a long history with the oil industry, and we share a common goal to have them stay and continue to succeed. To ensure that, we need good schools, a superior university system, quality infrastructure, and a PFD. That it is what all Alaskans expect,” Senator Bill Wielechowski (D-Anchorage) said. “These are common sense changes that were acceptable in the past and will go a long way to allowing us to provide those services that all Alaskans expect.”
Senate Bill 114 was referred to the Senate Finance Committee.
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