Testifying on behalf of the Governor, Department of Revenue Commissioner Bryan Butcher presented the Administration’s position on the Senate’s oil and gas tax bill, Senate Bill (SB) 192.
Commissioner Butcher stated that the tax cuts in SB 192 don’t go far enough to satisfy the Governor or the oil industry. He urged the committee to consider lowering the maximum tax rate to 50% (as written, SB 192 lowers the maximum tax rate from 75% to 60%) and “bracketing” progressivity, which would lower the overall rate of that particular tax feature.
Stating that it isn’t enough to influence investment decisions and that it further increases the complexity of the tax code, Commissioner Butcher suggested that the $10 per barrel allowance for increased oil production be replaced with increased tax credits for new field and in-field developments.
The gross minimum tax provision also drew criticism from the Commissioner, who argued that it represents a “huge” tax increase at low oil prices.
The petroleum information system proposed in SB 192 was briefly discussed and the Commissioner deferred additional comment to the Alaska Oil & Gas Conservation Commission (AOGCC). The AOGCC will provide testimony on Friday, March 16.
Finally, SB 192’s separation of oil and gas production taxes—or “decoupling”—was addressed by the Commissioner, who acknowledged that he is working with my office to identify the best way to resolve this complex problem.
Commissioner Butcher’s entire presentation can be accessed online here.
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