A multi-billion dollar oil tax cut has passed the Alaska Legislature. Senate Bill 21 was approved by the House early Sunday morning then in the late afternoon the Senate agreed to some changes made by the House.
Gov. Sean Parnell and other supporters hope the tax reduction will lead to more production on Alaska’s North Slope. But during three legislative sessions of hearings on some form of tax changes, Alaska’s major producers, ConocoPhillips, BP and ExxonMobil, never committed to increased investment. Critics call it a give away.
The bill includes a 35 percent base tax rate and $5-per-barrel credit for oil produced. The credit would apply to what would be considered new oil and production that also would qualify for a 20 percent tax break, known as a gross revenue exclusion. Certain units made up exclusively of leases with higher royalty rates and not getting royalty relief could get a 30 percent tax break.
Administration officials expect the vast majority of Alaska’s legacy fields would be subject to a 35 percent base rate and a per-barrel allowance on a sliding scale.