JUNEAU, Alaska (AP) — Alaska's revenue commissioner said Tuesday that he's seen no evidence that tax credits to oil companies have led to increased production.
Bryan Butcher said in an interview that that's not to say evidence doesn't exist. But he said he hasn't seen a direct connection between the credits and increased production.
Butcher was among the administration officials testifying Tuesday before a Senate committee that began working on Gov. Sean Parnell's plan to cut oil production taxes.
Parnell has proposed overhauling Alaska's oil tax structure, with the goal of making Alaska more competitive and encouraging new production. The plan would eliminate the progressive surcharge that companies have said is a disincentive to new investment and revamp a suite of tax credits, focusing on companies that produce new oil on the North Slope.
Tax credits under the current system could top $1 billion next fiscal year alone.
Butcher said the companies aren't doing anything wrong by claiming credits, but he said the credits could put a strain on the state, particularly if oil prices — and oil revenues — tanked.
Alaska's existing tax structure features a 25 percent base tax rate and progressive surcharge triggered when a company's production tax value hits $30 a barrel. The idea when it was passed in 2007 was that the state would help companies on the front end by providing such things as tax credits and share profits on the back end when oil flowed and prices were high.
Besides industry complaints about the surcharge, which companies say eat too deeply into profits when oil prices are high, lawmakers have questioned what the state is getting in return for tax credits.
Parnell has said he wants to restore balance to the system, and to make it simpler and durable, so lawmakers don't need to go back and tinker with it every few years. He said he also wants any tax plan to be fair to Alaskans.
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