House Democrats proposing higher oil taxes — again

WHOPPING 75 PERCENT INCREASE ON MINIMUMS

Because Senate Republicans refuse to pass an tax on working Alaskans, the Democrat-controlled Alaska House majority is once again calling for higher taxes on oil.

Democrats introduced House Bill 288, which would increase the minimum oil and gas tax from four percent to seven percent.

That’s a 75 percent increase at a time when the most recent tax change, HB 111, has not even fully been implemented. HB111 was passed in July.

According to HB 288’s co-sponsor Rep. Andy Josephson, the change would raise about $225 million.

The Governor’s Office apparently didn’t know about the bill and the Department of Revenue has provided no fiscal note or analysis.

Speaker Bryce Edgmon also may not have known about the bill, as he told the Resource Development Council on Jan. 4,  “An industry tax? I don’t see that being on the table next session.” Instead, he promoted an income tax to the group of business leaders.

And yet, here it is. HB 288 was introduced Tuesday by Reps. Geran Tarr  and Josephson, who are the Democratic co-chairs of the House Resources Committee.

Rep. Paul Seaton, a Republican from Homer and co-chair of House Finance, is also a sponsor. He is a member of the Democrat-led caucus, and none of the Democrats would have their positions of power had not he, Rep. Gabrielle LeDoux, and Rep. Louise Stutes joined the Democrats’ caucus. That makes Seaton extraordinarily powerful in the majority caucus and he has had a pattern of advocating for higher taxes on everything.

Seaton was overheard telling oil company representatives on a flight to Juneau on Monday that they could avoid the tax if they would simply pressure lawmakers to pass an income tax. It was his way of leveraging them into working with Democrats to tax somebody else.

“The Senate’s unwillingness to consider new revenues has left Alaskans with limited choices for a sustainable budget future,” Tarr said in a press release. “This bill represents a modest, fair increase in oil taxes that benefit all of Alaska.”

The price of oil, she said has “stabilized in the $60 per barrel range.” Oil reached $60 a barrel in October and has been over $65 for months.

“Stability in oil taxes ensures that present and future Alaskans can share in the benefits of Alaska’s natural resource wealth,” said Rep. Josephson. “If we aren’t increasing the Permanent Fund, then we won’t have new revenues to share through the permanent fund dividend program. Even with all the increased oil exploration happening in existing and new locations, we can’t balance the budget with the existing revenue stream.”

The Permanent Fund grew by $300 million this week and over $6 billion since last June.

There have been seven major tax changes in the last 12 years. HB 288 would be the third oil tax change in three years, including HB 111, which was also sponsored by Josephson and Tarr.

“If the Senate refuses to address small steps to diversify revenue sources, then we must continue to rely on the oil and gas sector to fill the gap,” Seaton said.

“This slight but fair addition to the minimum tax will add a reasonable amount of money to the state’s revenue to help reduce the budget deficit,” said Tarr.

The Governor’s Office has based its budget on a projected oil price averaging $56 per barrel for 2018 (the fiscal year that ends on July 1) and $57 for 2019. Oil crossed over $56 in September and has climbed since. For every dollar it increases, the state receives another $30 million.

Meanwhile, Rep. Tarr is also co-chair of a bipartisan and bicameral working group that formed last year to examine all aspects of oil taxes. The working group was agreed to by the generally anti-tax Republicans in order to break legislative deadlock over the final version of HB 111, but it appears that Tarr is already out in front trying to change the oil tax structure before the group has a chance to finish its work.