Tax Cut Bill Will Not Change Fiscal Picture, Oil Producers Say
Oil producers testified before the Senate Finance Committee Wednesday
JUNEAU - The major North Slope oil producers say the tax cut bill being considered in the state Senate will not change the fiscal picture enough to generate significant new investment.
They testified before the Senate Finance Committee Wednesday.
"So I'm confident that if we can have a more attractive environment for capital investment, you're building the framework for a long-term, healthy oil business on the North Slope, and you will see multiple returns in terms of that capital to the state for additional investment," said Scott Jepsen of ConocoPhillips.
"I assure you that as you widen that viability of projects, more will immediately appear. There are more projects out there. When we put our engineers and our geo-scientists and technologists looking for those opportunities, they will come," said Dale Pittman of ExxonMobil.
But one senator said there are not enough specifics on what additional investments there would be with a more generous tax cut.
"That is the concern I have as I look at it, that this is a business arrangement that we're trying to make here, and it's a little too much cat and mouse here at this point in time," said Senator Joe Thomas, D-Fairbanks. "It needs to be a little more structured of what would take place. No guarantees, we understand that, or I understand that."
And another senator said his constituents are not interested in modifying the feature of the tax that increases the state's percentage take at high prices.
"Their mandate to me is make sure you keep progressivity in place because as the price of oil gets higher and higher out here and we can only afford to buy stove oil in small amounts because we can't afford a full tank-full, you make sure we have the ability to have those social services that the state is responsible for out there," said Senator Donny Olson, D-Nome.
A BP executive went so far as to suggest cutting the base tax rate from 25 percent of company profits to 20 percent.
That idea was immediately squashed by the committee's co-chair Bert Stedman, R-Sitka.
"It’s unlikely -- there's guys went to federal jail over 20 percent taxes -- some of us are extremely reluctant to enter into the base tax debate. And some us feel pretty strongly that 25 percent is the reasonable level and that we can work other levers dealing with progressivity and other things."
In this meeting of the industry and the finance committee, there was no meeting of minds.
Governor Parnell’s bill, HB 110, passed the house last year.
Senators declared it dead on the first day of session, but the governor said this week he still wants to see that bill, or something similar, passed this year.