Oil tax bill passes before Alaska Legislature's adjournment

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April 16, 2013


By Alex Murray

JUNEAU, Alaska: Hours before the Alaska Legislature adjourned, a bill reducing taxes on oil production passed, now requiring only the signature of its main proponent, Gov. Sean Parnell (R).

The House version of Senate Bill 21 passed 27-12 Sunday morning, with the Senate concurring 12-8 later that day. Under the legislation, Alaska's Clear and Equitable Share (ACES), a progressive system advanced by former Gov. Sarah Palin (R), would give way to a new system with a base tax rate of 35 percent of net profits on all oil production in the state. Even though the base rate will increase from 25 percent, producers are expected to have their taxes lowered by $3.5 billion or more over the next five years due to the elimination of the progressive component. After tax credits and allowances, officials say producers could be effectively taxed as low as 14 percent.[1][2][3]

Parnell and oil producers say that the ACES system deterred development in the state, which is heavily dependent on the oil industry.[1] Democrats, upset over the loss of revenue, say they will support a push by former state representative Ray Metcalfe to get the issue on the 2014 primary ballot.[3] The Division of Elections says that out of the three public votes that made it to the ballot in Alaska's history, two passed.[4]

Alaska is one of 24 Republican state government trifectas.

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