Governor Sean Parnell today lauded the Alaska Legislature for passing his oil tax reform legislation, designed to increase opportunity for Alaskans and grow Alaska's economy. Following years of study, public debate and testimony, the governor's legislation to spur oil production and attract new investment passed the Alaska Legislature Sunday.
"Alaska's below-ground resources are world class," Governor Parnell said. "Above-ground, we have now set the stage for a future of growth and opportunity for Alaskans. We are signaling to the world that Alaska is back, ready to compete, and ready to supply more energy once again."
Senate Bill 21 eliminates the complicated "progressivity" feature of the current tax system and replaces it with a simple 35 percent base rate and a per barrel tax credit tied directly to the production of oil.
By ensuring Alaska's treasury is not exposed to the risk of paying $1 billion and more in tax credits when oil prices are low, and keeping the state competitively positioned when prices are high, Senate Bill 21 is fairer to Alaskans regardless of the price of oil. The legislation restructures the tax credit system so the state is not on the hook for billions of dollars in tax credits not specifically tied to production. This legislation replaces those credits with tax incentives that are applied based on actual oil production.
"I applaud legislators for fostering an open, respectful, and honest dialogue with Alaskans," Governor Parnell said. "They have passed legislation that meets our four guiding principles: this legislation is fair to Alaskans, it encourages new production, it is simple and restores balance to the system, and the tax structure is competitive and durable. Alaska's oil comeback starts now."