Thursday, the Senate Finance Committee advanced its version of Senate Bill 21, which will enact a competitive oil tax system for Alaska.
The legislation aims protects state interests at low and high oil prices, while making Alaska more attractive for investment in both new exploration and in our legacy oil fields. The committee led a thorough review of the bill, holding 12 hearings and taking hours of testimony from the public, the industry, and international oil and gas consultants.
Senate Finance Co-Chair Senator Kevin Meyer of Anchorage said that this bill is an effective approach to balance Alaska’s oil taxes while making Alaska competitive among other oil producing regions, such as North Dakota, Alberta, Texas and the North Sea.
During the committee’s deliberation, analysis by legislative consultants showed that at current prices it would take between 55,000 and 70,000 barrels a day for the state to take in more revenue under Senate Bill 21 than Alaska’s current tax system.
The Finance Committee Substitute for Senate Bill 21 establishes a top base tax rate of 35-percent for the next three years and transitions to a 33-percent rate in 2017. The phased approach tempers the bill’s impact on the state treasury while moving the state towards a more targeted tax system which is competitive across a broad range of oil prices.
Governor Sean Parnell said that he is committed to signing legislation that meets his principles for oil tax reform..
Gov Parnell: “One, that any change must be fair to Alaskans; two, it must encourage new production; three, it’s got to be simple so it restores balance to the system; and four, it must be competitive and durable. Alaskans deserve to reap the benefits of our oil and not passively accept status quo decline. Any legislation that meets my four guiding principles will not only have my support, it will get my signature.”