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Alaska legislative panel unveils oil tax rewrite

Published on NewsOK Modified: February 22, 2013 at 9:48 pm •  Published: February 22, 2013

JUNEAU, Alaska (AP) — The Senate Resources Committee on Friday unveiled a rewrite Gov. Sean Parnell's oil tax overhaul.

The proposal kept some of the bones of Parnell's plan in place, but increased the base tax rate from the current 25 percent to 35 percent and provides a $5 a barrel credit for oil produced.

Committee members said it was geared at concerns that were raised about Parnell's plan, that the level of government take is too low at higher oil prices and too high at lower prices.

Early modeling indicated a flattening of the government's take around 60 percent from $80 to $120 oil for new entrants and roughly between 63 percent and 65 percent for prices from $100 to $160 a barrel.

Increasing oil production is a shared goal between the governor and legislators. The debate centers on how best to do that.

Parnell has proposed a plan that he says would restore balance to the system, and is aimed at making the state more competitive while encouraging new production. It would scrap the progressive surcharge that companies say is a disincentive to new investment but that has been credited with helping fatten the state's coffers the past few years.

It also would revamp the suite of tax credits, which could top $1 billion next year. Parnell's revenue commissioner has said he's seen no evidence that credits to oil companies have led to increased production.

Parnell's plan would keep in place the 25 percent base tax rate and include a tax break for oil from new fields, including new areas of the legacy fields, long the mainstay of Alaska's oil industry. It would keep in place credits for exploration but eliminate credits for qualified capital expenditures on the North Slope. Other credits would be geared toward production of new oil.

The work-in-progress Senate plan would increase from 20 percent to 30 percent the tax break for oil from new fields and new areas of legacy fields proposed by Parnell, known as the gross revenue exclusion.

Sen. Cathy Giessel, R-Anchorage, and the committee chair, said the plan would use that tax break as an incentive for companies in existing fields to try new technologies, like horizontal drilling, to access oil they otherwise wouldn't be able to tap.

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