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BP: Oil tax cut a good first step for investment

Associated Press Modified: January 27, 2011 at 8:26 pm •  Published: January 27, 2011

JUNEAU, Alaska (AP) — Gov. Sean Parnell's proposal to slash oil production taxes is a good start toward creating a more hospitable investment climate, a spokesman for BP Alaska said Thursday, but he stopped short of promising that tax cuts would lead to more jobs or investment in the state.

Steve Rinehart told The Associated Press that companies must consider more than taxes when making investment decisions.

Nonetheless, he said the relationship between fiscal policy and investment is "pretty clear" and BP will try to provide a "spectrum of assurance" as lawmakers weigh tax changes. He said there's considerably more oil to be developed on the North Slope and BP PLC wants to invest more in Alaska.

Parnell has proposed changing the progressive surcharge now triggered when a company's net profits top $30 a barrel, subjecting incremental values to higher taxes. For units in production, the surcharge would be capped at 50 percent when oil prices exceed $92.50 a barrel; for new fields, the cap would be at 40 percent for higher-priced oil.

He has said his own research lent credence to industry complaints that there's no incentive to invest in the state when oil prices are high because the tax structure eats into profits.

He said last week that it's "common sense" that lower taxes create more jobs. But he also called on industry officials to testify about the need for changes and what level of investments they'd make in Alaska if the Legislature enacts any.

Some House Republicans have proposed a bill similar to Parnell's in its bracketing of taxes, seeing it as a way to help spur declining oil production. But not everyone is convinced of the need for change.

House Minority Whip Berta Gardner expressed frustration with Rinehart's statements.

"It's up to the Legislature to listen to the case anyone wants to make," Gardner, D-Anchorage, said, "but we're looking for someone to show us the jobs, the benefits that come to Alaska on any issue."


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