Alaska governor Palin wants lawmakers to restructure state oil tax

September 4, 2007

Juneau, Alaska - In a press conference Tuesday, Alaska's governor Sarah Palin announced that she is asking lawmakers to restructure the state's oil production tax at a special legislative session next month in Juneau.

Palin said, "We must receive appropriate value for our oil. It must be a clear and equitable share."

A federal bribery and extortion scandal between Alaska lawmakers and VECO Corp. (an oil field services company) forced the governor to take a look a the tax revision.

Senate President Lyda Green, who has taken money from VECO, told the AP "There is nothing that we are going to be doing that can't wait until the regular session next year," she said. "It's way too early right now to say whether (PPT) is right or whether it isn't right."

Palin also said she'd like public hearings on the tax held on the state's highway system and in Anchorage and Fairbanks.

The state is expected to receive $800 million less for the current fiscal year than would have been expected under the actual PPT documentation that was predicted by last year's administration under former governor Frank Murkowski.

From a Governor Palin press release:

Governor Sarah Palin today unveiled a new oil and gas tax plan. The proposal comes after an extensive evaluation of the current Petroleum Profits Tax by the Department of Revenue. That evaluation showed the state is expected to receive $800 million less for the current fiscal year than would have been expected under the actual PPT documentation presented by the prior administration. The new plan, called Alaska's Clear and Equitable Share, or ACES, is a hybrid of a gross and net tax system. It includes a minimum 10 percent tax based on gross receipts for the North Slope's legacy fields with a 25 percent net tax to encourage new development and reinvestment in existing infrastructure. ACES also allows for tax credits on future work. It restricts capital expense deductions to scheduled maintenance and implements strong audit and information sharing provisions.

"In case there is any question on where we stand, let me be clear - PPT doesn't work as promised," said Governor Palin. "There are those who would say we should do nothing and that we should continue the PPT experiment. Doing nothing is not an option. This clearer, equitable plan fulfills our state constitution mandate that says I'm to develop our resources for the maximum benefit of all Alaskans."

Governor Palin also announced the Special Session will be held in Juneau and urged lawmakers to hold oil tax committee hearings and public testimony in Anchorage and Fairbanks. The Special Session is slated to begin October 18, 2007.

"I am pleased that Speaker Harris has pledged that the House will work with us to hold hearings on the road system," Governor Palin said. Radio actualities of Governor Sarah Palin and Revenue Commissioner Patrick Galvin announcing a new oil tax plan and the location of the special session can be found at the following link: http://www.gov.state.ak.us/audio/ACESPresser_Sept4_2007.mp3