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Tweaks on Oil Tax Bill Boost State Take

Posted on: Friday, 21 April 2006, 21:00 CDT

By Richard Richtmyer, Anchorage Daily News, Alaska

Apr. 21--JUNEAU -- Seemingly small changes can add up to big differences in state revenue when it comes to the oil tax proposals working their way through the Legislature.

The Senate Finance Committee's latest incarnation of the oil tax reform legislation -- introduced by Gov. Frank Murkowski two months ago -- sets a higher tax rate and increases the credits oil companies get on their gas field investments.

The committee also made a series of other changes to the complex bill. The upshot? It would yield the state about $850 million more in revenue next year than the governor's plan would, according to preliminary estimates provided Thursday by Dan Dickinson, a former state Tax Division director and now a Murkowski oil and gas consultant.

Dickinson and state Revenue Department officials have been working overtime lately crunching numbers and figuring out the implications of the oft-changing terms in the legislation.

The Senate Finance Committee proposed a tax rate of 22.5 percent, while allowing companies to subtract from their tax bills

20 percent of the amount they invest in Alaska oil field development. That compares with a 20 percent rate and a 20 percent credit proposed by the governor.

Members of the Senate Resources Committee had proposed a 25 percent tax rate and a 20 percent credit, as well as other changes that would have taken in about $1.4 billion more than the governor's plan, according to the Revenue Department's estimates.

Other small changes can amount to big dollars.

For example, the Senate Finance Committee's version sets a July 1 effective date, as opposed to the April 1 date the Senate Resources Committee had recommended.

That change alone would make a $418 million difference in taxes next year, Dickinson said Thursday.

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Copyright (c) 2006, Anchorage Daily News, Alaska

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Source: Anchorage Daily News

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