By Dave Donaldson
Governor Parnell today (Thursday) said he will introduce legislative amendments to the state’s petroleum revenue structure to give more investment incentives and tax credits to oil producers and explorers – in exchange for new jobs he anticipates would come from increased development. The incentives could reduce state income by as much as a Billion dollars a year according to the governor’s description.
I’m looking for jobs now. That’s what I’m here for when it comes to Alaskans. So they will only get the credit if they make that investment. And that investment means jobs. There’s no other way around it, if they make the investments, there are more jobs for Alaskans.
The governor’s plan came after a Department of Revenue review of the current tax structure found that the tax regime adopted in 2007 was highly successful.
Called the ACES system, it increased the state’s revenue over the two previous methods of oil and gas taxation. Under ACES the state collected six-point-eight Billion dollars in fiscal year 2008 – a year of very high oil market prices. That same year, it would have collected four-point-two Billion dollars under the plan the Murkowski administration put in place. And under the plan before that, it would have taken in only one point three Billion dollars.
Revenue Commissioner Pat Galvin said the analysis also showed that the companies’ operating and capital expenditures rose since ACES became effective – and employment numbers have risen to the highest level in history. However, Galvin said it’s premature to attribute those increases to the ACES structure.
Governor Parnell says those numbers could be better, however. And that’s why he believes the tax changes are needed.
Companies are holding on to their capital, and that’s because of an uncertain, global economic environment. However, they are turning loose some capital and we think, and I think, that if we propose tax credits like we have, that will incentivize investments here in Alaska, create jobs in Alaska. And that’s our motive here.
Parnell sees the proposed changes as “refinements” – adding that adopting a new tax regime is a significant event, and he sees his plan as a way of adding stability to the system. Enabling legislation will be introduced to the legislature after it convenes next week.