By Dave Donaldson
Democrats are urging the Parnell administration to take a more positive approach – and to make better use of the incentives the state currently offers oil companies.
Senator Hollis French and Representative Les Gara – in a letter sent to the governor today – say the failure of promoting the advantages of the state’s tax system is, actually, a deterrent to new investment in the state.
French says the oil industry is not hearing that the state offers substantial credits that will be returned to oil explorers or that they can get reductions on the state’s royalty that can carry forward into the production phase of a well.
The purpose of the letter was to remind him of these facts, and to remind others that speak on behalf of the state that we want to make sure that as we discuss the investment climate in Alaska we remember that there are powerful incentives for companies that come here to do business – in the form of royalty relief, in the form of investment tax credits. And the proof that those are working are in the profits that Conoco-Philips reports.
Conoco-Philips has reported that it has made $7.8Billion in profits since the current tax regime went into effect in 2007.
Representative Gara points to several specific highlights of the state’s tax system that need to be more widely known. He says the process is in place now for relief of the state’s royalty on oil if a company can prove that the reduction would make productive an otherwise-uneconomic project. He says another advantage is tax credits that companies can use totaling up to forty percent of their capital costs under some conditions.
There’s a lot to be said by the governor if he wants to attract jobs to this state. And this rhetoric back and forth about taxes too high, taxes too low, that’s a distraction that does not bring jobs to this state. So that’s the call on the governor – to start advertising the things that work. To start advertising the tax breaks that work, and to start talking about things that none of the talking heads are talking about.
The state budget presented for the legislature’s consideration this year includes appropriations to cover some $850-million in incentives already requested by producers. And Governor Parnell has introduced legislation that would make available an estimated Billion dollars in new incentives for oil fields as they go into long-term operations. French pointedly did not criticize the governor’s proposals.
In an e-mail, Parnell says he has met with every energy company doing business or expressing interest in developing in Alaska – and he looks forward to working with French and Gara on his bills to improve the state’s tax regime.