ANCHORAGE, Alaska, Jan 14 - Alaska Gov. Sean Parnell on Thursday defended the state oil-tax system that the industry has criticized as onerous, but said investment credits should be expanded to stimulate job growth.
Parnell said he will propose legislation to tweak the oil-tax system passed in 2007. Former Gov. Sarah Palin, the 2008 Republican vice presidential candidate, regarded the system as a hallmark of her term.
A state Department of Revenue review concluded the system's investment credits have encouraged industry investment, especially by new explorers, said Parnell, a Republican who succeeded Palin after she resigned last summer.
"I think the numbers speak for themselves that investment has been up in the industry. But the numbers could be better," Parnell said at a news conference.
The tax system imposes a sliding-scale tax based on oil prices. It has boosted state revenues by billions of dollars, Parnell said.
Parnell said the changes, if enacted, are likely to decrease state revenues but create new oil-industry jobs.
He said he would propose expanding the 30 percent exploration credit to infill drilling and well work-overs within existing oil fields. Currently, that level of credit is available only for wells drilled away from existing fields.
Parnell also would compress credits into a single year instead of spreading them over two years. He called for other changes such as reductions in interest on late tax payments.
One industry spokesman said Parnell's proposal fails to address companies' main complaint about the tax system.
The plan "does not address the core problem of progressivity," said Paul Laird, executive director of the Alaska Support Industry Alliance, an association of oilfield contractors.
At current oil prices, the state tax takes 40 percent of companies' income, Laird said. Along with royalties and other fees, total state take in Alaska is 70 percent at current oil prices, he said. Companies have complained that such high tax rates during high-price periods remove upside rewards that make potentially risky investments worthwhile, he said.
Parnell said he sees no compelling reason to change the sliding-scale rates.
Parnell said he will propose legislation to tweak the oil-tax system passed in 2007. Former Gov. Sarah Palin, the 2008 Republican vice presidential candidate, regarded the system as a hallmark of her term.
A state Department of Revenue review concluded the system's investment credits have encouraged industry investment, especially by new explorers, said Parnell, a Republican who succeeded Palin after she resigned last summer.
"I think the numbers speak for themselves that investment has been up in the industry. But the numbers could be better," Parnell said at a news conference.
The tax system imposes a sliding-scale tax based on oil prices. It has boosted state revenues by billions of dollars, Parnell said.
Parnell said the changes, if enacted, are likely to decrease state revenues but create new oil-industry jobs.
He said he would propose expanding the 30 percent exploration credit to infill drilling and well work-overs within existing oil fields. Currently, that level of credit is available only for wells drilled away from existing fields.
Parnell also would compress credits into a single year instead of spreading them over two years. He called for other changes such as reductions in interest on late tax payments.
One industry spokesman said Parnell's proposal fails to address companies' main complaint about the tax system.
The plan "does not address the core problem of progressivity," said Paul Laird, executive director of the Alaska Support Industry Alliance, an association of oilfield contractors.
At current oil prices, the state tax takes 40 percent of companies' income, Laird said. Along with royalties and other fees, total state take in Alaska is 70 percent at current oil prices, he said. Companies have complained that such high tax rates during high-price periods remove upside rewards that make potentially risky investments worthwhile, he said.
Parnell said he sees no compelling reason to change the sliding-scale rates.
