Oil tax hike initiative approved for ballot petition - Must Read Alaska
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Tuesday, November 12, 2019
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Oil tax hike initiative approved for ballot petition

PETITION BOOKS ARE NEXT STEP TO GETTING IN FRONT OF VOTERS

The “Fair Share” ballot initiative that would gut Alaska’s reformed oil tax structure known as SB 21, was accepted by the Lieutenant Governor’s Office, which means petition books can be printed, and supporters can start gathering signatures.

The decision came with a caveat: The ballot language is confusing, according to the Attorney General. It could be interpreted in such a way that it actually costs the state money. Read the Attorney General’s letter here:

The voter initiative would eliminate certain oil tax credits and reinstate progressive taxes on legacy oil fields such as those on the North Slope currently operated by BP and ConocoPhillips.

[Read the lieutenant governor’s letter to the sponsors]

Robin Brena, law partner to former Gov. Bill Walker, is the most visible force behind the ballot initiative, although plenty of Democrats are on board with higher oil taxes. Brena says it will bring an additional $1.1 billion annually to State coffers. He has been trying to move the state’s oil tax structure closer to the old ACES — “Alaska’s Clear and Equitable Share” regime that was enacted under Gov. Sarah Palin.

[Read the ballot language here.]

ACES is blamed by most analysts for the slowdown in oil exploration and production several years ago, as North Slope producers felt they were being gouged by the State of Alaska, and started putting the legacy oil fields into a tax-induced coma.

Then, SB 21 passed in 2013 in the Alaska Legislature. Opponents immediately took it to voters with a ballot initiative in 2014, which was defeated by voters. Things started looking up in the oil patch, even while prices were depressed.

But now, with the State of Alaska’s billion-dollar-plus budget crisis, will Alaska voters still show their support for oil producers to stimulate production? Will oil companies put their investment decisions on hold?

The tax initiative targets those legacy fields that have supported Alaska’s state government and economy for decades — Prudhoe Bay, Alpine, and the Kuparuk River fields, for example. The Fair Share plan would be to tax every barrel 10 percent if the price-per-barrel is below $50. For every increment of $5 in price increase, the tax would increase by 1 percent, until it tops out at a $15 percent tax for any barrel that sells for more than $70.

Kara Moriarty, Alaska Oil and Gas Association’s chief executive, worries that this tax initiative will sour oil companies on Alaska once again, and the fallout from that would be significant for the economy:

“This proposed ballot measure is yet another flawed attempt to adopt complicated tax policy through the initiative process. While the sponsors say it will not have any impact, make no mistake, no industry in Alaska can sustain a $1 billion plus tax hike without negatively impacting investment decisions for their business, which creates less opportunity for jobs for Alaskans. We look forward to communicating with Alaskan through this process,” Moriarty said.

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Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.

Latest comments

  • Very good news.
    ACES did not harm the flow of oil, most lack of intrest by producers was brought on by a recent boom of Texas oil reserves caused by increased and newer methods of fracking.
    There is still plenty of oil in Alaska and moving the tax structure back to ACES is a wise and sensible thing to do….ballot initiatives are the way forward for Alaskans as our Legislature is in a perpetual stalemate brought on by unions and oil lobbyists.

    • I trying to remember that during ACES and AGIA, price per barrel was nice, want to say over $80 a barrel.
      So, when the debate was going on the Dems controlled the House and Senate and wanted a 25% tax, and Sarah thought that was low and advocate 27% Main reason she lost all support by me and many others.
      Of course with the Dems controlling with a coalition of RINO’s (like today) they spent way more than ACES and AGIA brought in. Thus SB 21 of which I and many others, (57% voted no on the ballot to repeal) supported turned the tide with the small companies as well as the big guys.
      So, of course I will oppose this initiative with even more vigor than then.

  • This initiative should be voted down. Raising royalties on AK Crude won’t entice new development. The SOA has problems enough with: 1) honoring the Tax Credits and 2) reigning in the incessant runaway spending. Until those two items are adequately addressed, why would any Oil Company make any amount of significant investments in AK?

    • …because there is oil here, there is infrastructure here, they know how to do it, they have willing and eager workers, they’re making money, and they don’t need to worry about the Mujahideen.

      Where do I sign?

    • Agree 100%

  • “The Fair Share plan would be to tax every barrel 10 percent if the price-per-barrel is below $50.’ Is this correct or did you mean “above?

  • Why don’t we tax the fisheries, tourists, mining and any other money making venture at the same rate as oil? They all should pay the same as there are all of are resources to share.

    • Ah, a true egalitarian. A rare find indeed.
      BTW, how do you feel about a straight 10% income tax for those of us who live here and benefit from the state and local infrastructure, since it’s there for all of us?

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