A major tax break for oil companies signed into law in May is now the heart of a battle between industry-friendly politicians who say the tax break will boost sluggish production and citizens who are demanding a refund.
A citizen group has gathered 50,000 signatures to repeal the May tax break—enough to place a repeal of Senate Bill 21 on the August 2014 primary ballot.
Republicans in Alaska have long argued that only a massive tax break would give oil companies the certainty necessary to ramp up production to bolster the state economy. That’s one side of the story. The other side is that of citizens backed by Democrats who feel this was a simple giveaway of the state’s oil wealth and that they won’t see much in return.
Here’s the backstory. In May, Alaska Governor Sean Parnell signed the tax break legislation, which passed in an 11-9 Senate vote. The legislation reversed the progressive tax system that raised taxes along with rising oil profits, which had been put into effect under Parnell’s predecessor, Sarah Palin. (According to Forbes, two of the majority yes voters work for ConocoPhillips.)
The general consensus now is that the oil lobbyists might have taken things a bit too far—and might have benefited from some more subtlety. Now the legislation is in danger of being overturned, so the major victory big oil has won in Alaska may indeed be short-lived.
“Too much was given up in that bill in exchange for too little, Alaska Senator Hollis French, a Democrat, wrote in an op-ed piece in the Anchorage Daily News. “Alaskans simply saw about $4.5 billion of money that would have been used to build roads and educate our children over the next five years given over to three of the richest corporations in the world.” French has been calling for Alaskans to appeal the legislation since May.
“What has happened now with the new law, to the best of my knowledge, is, number one, the credits that were incentives to have small companies explore have been eliminated, and that turns basic control back over to the three majors again. And that’s not the way to get more oil production underway,” Alaska Dispatch quoted Dick Waisanen, one of those who volunteered to gather signatures to have the issue put on the next state election ballot.
By. Charles Kennedy of Oilprice.com