Senate Bill 192 Has First Hearing in Finance Committee

Today, the Senate Finance Committee began hearings on Senate Bill (SB) 192, which would make changes to Alaska’s oil and gas tax laws.

The Committee heard an introductory presentation from Senate Resources Committee Co-Chair Senator Joe Paskvan, who played a key role in crafting the version of SB 192 currently before the Senate Finance Committee.

In his presentation, Senator Paskvan outlined many of the discussions held and arguments heard in Senate Resources that led to the specific provisions added to SB 192.

Those provisions include five changes to Alaska’s current oil and gas tax structure:

• • A reduction in the rate at which progressivity is calculated and a reduction in the maximum amount of the oil and gas production tax.  (Progressivity is the part of our tax system that increases the amount of tax owed by an oil company as the price and profit from a barrel of oil increases.)
• • The addition of a tax “allowance” that would reduce the amount of taxes owed by an oil company that increases its oil production from the previous year’s level.
• • The addition of a minimum tax based on the total value of oil and gas produced by an oil company.
• • A separation of the calculation of oil taxes from gas taxes.  (Current law has a combined oil and gas tax, which in the event of a major gas sale would result in a very significant and nonsensical loss of revenues to the state.)
• • The creation of a “petroleum information management system” that would consolidate publicly available information relating to oil and gas production into a one-stop shop for policymakers and potential investors.

Senator Paskvan’s entire presentation can be accessed online here.

In the coming days, the Senate Finance Committee is prepared to take as much time as necessary on SB 192 in order to make well-informed, reasonable changes to Alaska’s oil tax structure that is fair to both the state and the industry.  As we proceed with the Committee hearings, I will post frequent updates on this website to keep the public informed of our progress.