With their current special session ending Thursday, Alaska lawmakers voiced skepticism that there would be time to pass bills to freeze oil taxes and make changes to the Alaska Stranded Gas Development Act sought by Gov. Frank Murkowski (see Daily GPI, June 2).
Revising the state’s oil taxing mechanism is key to a draft agreement the governor has made with BP, Exxon Mobil and ConocoPhillips for development of the Alaska Natural Gas Pipeline, Murkowski maintains. During the special session, lawmakers have been hearing presentations on the provisions on the gas contract. Public meetings also have been held.
On Sunday the Alaska House approved a bill to tax oil company Alaska profits at 23.5%, according to the Anchorage Daily News. Members also approved an escalator that would tax profits at an even higher rate when North Slope crude is about $50/bbl on the West Coast. This version of the bill, which passed 28-12, would tax the producers at a rate higher than most of the legislation previously considered, including a version that passed recently in the Senate with a rate of 22.5%. Murkowski wants a much lower tax rate — 20% — and he wants to give producers a 20% credit for in-state investment (see Daily GPI, May 26). Robynn Wilson, Murkowski’s tax director, told the paper that the governor’s office was disappointed in the rate approved by the House.
The Senate was expected to vote today on oil taxes. A companion bill was still going through the committee process in the House.
The governor wants to roll the tax provisions into his draft contract with the producers that sets the fiscal terms for the natural gas pipeline to bring North Slope supplies down through Canada and ultimately the Lower 48. Among the terms of the contract, Alaska would become a 20% owner of the gas pipeline, and it would take its royalties from producers in kind rather than in cash. This would put the state in the gas marketing business (see Daily GPI, May 12).
Murkowski and the producers who would develop the pipeline claim that the tax freeze, which would last for decades, is necessary to create the fiscal certainty needed for development of the $20 billion-plus pipeline project.
“I don’t think we’re going to see those [bills] before us before the end of the special session,” House Speaker John Harris (R-Valdez) told the Daily News.
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