Last week, the public got its first chance to comment on Gov. Sean Parnell’s plan to cut taxes on oil companies and restructure the way credits are given out. Opinion was split. Supporters said that scrapping a mechanism that raises taxes when oil prices are high could increase oil production in the state, while critics argued that the getting rid of progressivity would be a “giveaway” to oil companies.
On Tuesday, representatives from the oil and support service industries got a crack at the proposal, and the testimony was not so polarized.
Bob Heinrich is the vice president of finance for Conoco Phillips, and he says that his company is happy with the bill as a starting point.
“We believe it’s a good step forward to set the stage for an improved investment climate. By eliminating progressivity it solves the problem of high marginal tax rates. And it certainly makes Alaska more competitive in a higher price environment,” Heinrich says.
But there are still some things about the bill that Conoco Phillips would like changed.
“The flip side of that, though, is that at today’s prices and lower, as it’s drafted, it represents a tax increase to producers that will discourage investments if your perspective is downward or you’re in a downward-trending market,” Heinrich says.
The Alaska Oil and Gas Association also favored of getting rid of progressivity, but didn’t like what the plan did to tax incentives. As it’s written, the bill would tie credits to production instead of exploration.
Right now, the bill is being heard by a special Senate committee on oil production. They expect to move the bill on to the finance committee by the end of the week.