Oil Tax Credits

House Bill 111 Oil Tax Legislation

A gutted version of House Bill 111 is in the Senate Finance Committee. Your voice is needed to strengthen the bill and ensure oil companies pay their fair share.

Without changes, the State of Alaska is projected to pay out more in oil tax credits in Fiscal Year 2018 than it will take in from production taxes. The House passed a moderately strong oil tax revision to the Senate. Senate Resources Committee stripped out the bulk of the cost saving provisions that passed the House, while retaining the important change in eliminating cashable net operating loss credits.

The bill version in front of Senate Finance is bare bones. We need you to call and tell the Senate Finance Committee that you want a stronger and more robust HB111. These reforms are important — passing comprehensive oil tax reform will bolster other fiscal reform efforts. How can you ask Alaskans to contribute to an income tax, pay a statewide sales tax, or lose their dividend so they can help pay for millions of dollars in direct cash payments to a for-profit company undertaking normal, for-profit business operations?

Remember, you don’t have to be an expert in petroleum finance or tax statutes to offer an important perspective. As Alaskans, we all have a stake here. We Alaskans have a right and a duty to tweak the instruments of oil taxation. HB 111 would have decreased our fiscal liabilities and taken our state in the right direction, but the version currently being debated in Senate Finance does not go far enough.


Talking Points for HB 111

• The House version of HB111 would have saved Alaska money, but the Senate version does not go far enough to help with our deficit.
•We support our neighbors in the oil industry, this bill still leaves a generousness tax structure in place and allows oil industry to thrive
• Without changes, the State of Alaska is projected to pay out more in oil tax credits in Fiscal Year 2018 than the state will take in from production taxes.
• Through the end of Fiscal Year 2016, about $8 billion in tax credits have been received by companies.
• For work done in 2015, the producers earned credit certificates for up to 85% of the cost
• HB 111 protects the state from a nearly unlimited financial liability to cover losses incurred by companies that operate on the North Slope. This is good.
The previous version of HB 111 fixed a major flaw with the current tax credit system where companies can apply losses and expenses from unproductive fields against the taxes they would owe on more productive oil fields. The solution to this was called “ringfencing”. It was removed by Senate Resources and should be put back in.
• The previous version of HB 111 sought to simplify the current tax system by eliminating the complicated sliding scale per barrel credit that changes the effective tax rate depending on the price of oil. This was removed Senate Resources and should be put back in.
• The previous version of HB 111 eliminated the provision in law where a company is not charged interest on delinquent taxes after three years of delinquency. This was stripped out by Senate Resources and should be put back in.