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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.

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