Democratic Legislators Propose Oil Tax Alternative
Reduction for Production: Bill Targets New Oil in the Pipe and Protects Alaska
JUNEAU – House and Senate Democratic legislators introduced legislation today to grant tax concessions to oil producers who put new oil into the pipeline. The bill (SB50, HB 111) targets tax incentives to new fields and to new development in existing fields, and it offers other incentives outside the tax code to spark new development.
“The goal is to get more oil into the pipeline and to get a fair share for our oil,” said Senate Democratic Leader Johnny Ellis (D-Anchorage). “We propose a reduction for production structured in such a way that it truly rewards new oil and new production.”
“Our proposal walks the walk on increasing production and protecting Alaska,” said House Democratic Whip Chris Tuck (D-Anchorage). “We give benefits to anyone who opens a new field or gets more oil from an existing field, and we offer some new ways to help get more oil out of the ground and into the pipe.”
For new fields, the bill would exempt twenty percent of the barrels produced from production taxes in addition to the generous investments the state is already making in the form of credits. For new oil from existing fields, the bill offers three options for producers to choose from: a tax reduction on all barrels above current levels, a tax reduction for tapping into new pools within old fields, or a break for producing heavy oil. More details are in the white paper linked below.
“You don’t have to give away the farm to get more oil production,” said Senator Bill Wielechowski (D-Anchorage), the prime sponsor of the Senate version of the bill. “We put up sideboards at very high and very low prices, and we give significant rewards for new oil in the pipeline.”
“Giving breaks for companies that produce more oil is one lever, and we do that,” said Representative Les Gara (D-Anchorage). “But we also need to expand the conversation about how to get more oil flowing, and that includes partnering with the industry, finding new technology to pull up heavy oil, and helping companies get the oil from new fields into the pipeline. And in this bill we do that too.”
House Democratic Leader Beth Kerttula (D-Juneau) is the prime sponsor of the House version of the Democratic legislators’ proposal.
White Paper on the contents of the proposal are here: http://akdemocrats.org/docs/021113_Press_Packet_wo_release.pdf