Oil Industry: Alaska Grants a Tax Break to Oil Companies - Democrats vote against

Hoping to reverse two decades of declining oil production in Alaska, the State Legislature in Juneau has granted oil companies an estimated $750 million in annual tax relief to increase investment in the giant North Slope oil field.

The Alaskan economy runs on crude; about a third of employment is dedicated to the oil industry. The state receives so much royalty and other oil tax money that there is no need for a state sales tax or income tax, and residents receive checks from the Alaska Permanent Fund, a corporation largely financed by oil revenue, that roughly totals $5,000 a year for a family of four.

Oil companies argued that the system was not sustainable. In recent testimony before the Alaska Senate Finance Committee, Dan Seckers, Exxon Mobil’s Anchorage-based tax counsel, said that the current tax structure “creates a major disincentive to invest in the high-risk, high-cost opportunities available in Alaska.” 

Most Democrats in the Legislature voted against the tax change, arguing that it would force the government to cut more than $860 million to balance the budget in 2014, when the tax change will take effect. The tax rate had produced a windfall for the state in recent years, because oil prices were high. While other states were struggling with tax shortfalls, Alaska was able to put away $17 billion in a rainy-day fund. 

Read more: Alaska Grants a Tax Break to Oil Companies - NYTimes.com