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Gara Challenges Parnell on Implied Claim of Oil Tax, PFD LinkThe fight is about the governor's proposal to reduce oil production taxes.Did Governor Sean Parnell say declining oil production would mean lower permanent fund dividends in the next several years? Representative Les Gara says he did, and Gara says that's in error. The fight is about the governor's proposal to reduce oil production taxes. Governor Parnell made the dividend announcement on Tuesday, and warned that the amount is likely to go down. He has been arguing all year that the oil industry needs a less progressive tax rate to entice greater investment and therefore increased production. He didn't mention his tax cut bill during the PFD news conference, but Gara says that's clearly the subtext. But did the governor imply that failure to pass it would reduce the dividend? You decide. The governor said: "Alaskans can face diminishing dividends based upon the current calculation because, in part, poor performance of the stock market. And then, additionally, over time, because of declining oil production, there will be fewer and less royalties going into the permanent fund, unless we turn that around." Gara says that statement by the governor was intended to mislead and scare Alaskans. "The governor said that the dividend will fall if oil production falls. And look, we're all trying to reverse the decline in Prudhoe Bay. But he's got an oil tax bill he's trying to sell; the public doesn't support it; and he's resorted to fear-mongering now by telling people their dividend will go down. And that's just not true." Gara's point: The fund, which just hit a record fiscal-year end total above $40 billion, can only increase as oil production continues at any level. "Every barrel of oil -- 25 percent of the royalties go into the permanent fund. So whether it's 500,000 barrels a day, 700,000 barrels a day -- that permanent fund is getting bigger. Of course, depending on the stock market. But for him to claim dividends are going to fall if his bill doesn't pass, that's fear mongering for really a bad piece of legislation." So are Alaskans scared? Actually, most people we talked to at random today were not completely sure of the relationship between oil revenue and the permanent fund. Is the dividend paid from oil money or fund investments? Michael Dooley: "Well, I would say the both contribute, but more so the majority would be from the market." Derrick Nevak: "I think most of the money comes from the taxation of the oil companies up here." Tyler Berliner: "I understand that the oil companies make a tremendous amount of money on oil in Alaska and elsewhere, and the state certainly taxes at a level that's pretty high, but does it stop oil companies? I don't think so." If the governor truly was trying to scare people about their dividends, it's far from clear that it worked. The dividend is based upon a five-year rolling average of investment returns from money that is already in the permanent fund principal. Eventually, greatly increased production -- such as the governor's goal of 1 million barrels a day by 2021 -- would increase the size of the principal and the potential for higher investment returns, leading to higher dividends. But Gara is emphatic: That's not what the governor said.
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WasillaSourDough said on Saturday, Oct 15 at 7:00 AM
How insulting! Parnell stands before his constituents, with a straight face, and lies for the Oil Companies. What a sham he has become--an oil-shill spewing untruths to scare voters into thinking his way. The worse part is this is the "self-proclaimed Christian". Hell awaits those that use His name for personal gain!!
75353513Tom Baxter said on Thursday, Sep 22 at 10:29 PM
Oil has very little to do with dividend profits, wall street controls that not oil. Secondly North slope employment is at its highest levels in history, prodution will follow. We are not running out of oil in our life time if your alive and reading this post!
74227749Stephan G. Patterson said on Thursday, Sep 22 at 9:36 PM
Sean Parnell is the water boy for the oil guys. He has been more naive and blatant in his hefting the load for them than has any other occupant of the govs. mansion. Les Gara is correct. The Permant Fund will continue to grow as a result of its investmants.
74226718Cameron Bonham said on Thursday, Sep 22 at 9:34 PM
Why is when someone tells the truth, some people resort to name calling or suggesting that this person isn't American enough. We already know that despite the governor saying that we need to reduce taxes to help oil companies invest more in Alaska. so let's look at the facts, first of all, if you look at the statistics, all of the oil companies are posting record earnings and there have been a lot of companies investing in the North Slope this year despite the governor saying that they can't do this unless we reduce taxes. What we need to remember is that the oil that they are pumping out belongs to the state of Alaska and Parnell was part of the group that helped pass this ACES and then all of a sudden, he's governor and we have to lower the taxes, we haven't had the ACES taxes around long enough to know the effects. The oil belongs to the state and thus to all of us. Les Gara is standing up for Alaskans and I for one thank him for that.
74226667Doug Smith said on Thursday, Sep 22 at 8:57 PM
Les Gara is a political abbomination. The guy should move to Venezula and hang with Hugo to experience the socialism he so richly deserves. One would have to be an idiot to believe that the PFD operates independent of oil production.
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