News from the Alaska State Legislature, the Office of Senator Giessel
For Immediate Release: April 18, 2017

Testimony Affirms Need to Protect Oil Tax Regime, Investment

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JUNEAU – This week, powerful public testimony and guidance from expert witnesses in the Senate Resources Committee contradicted the significant oil tax policy changes approved by the House of Representatives, now under consideration in the Senate.

“Cleary, this legislation is designed to slam a massive tax increase on an industry that is currently supplying more than two-thirds of our state revenue – and that is already challenged at these low oil prices,” said Sen. Cathy Giessel (R-Anchorage), chair of the Senate Resources Committee. “The House bill, which the governor appeared to endorse, would be a highly imprudent action that is likely to reduce the investment we need to keep good jobs supporting Alaska families and businesses. The tax policy change threatens the royalties growing our Permanent Fund, money flowing into our state treasury, and property tax revenue building our local communities.”

The committee heard several hours of public testimony from across the state on proposed changes to Alaska’s oil tax system. Feedback from the public was overwhelmingly against increasing taxes on the oil industry, although a number of people encouraged the state to end a program of cash incentives for smaller, new companies with exploration and development plans. 47 people spoke against the bill, 13 were in favor, and two were partially opposed.

“We’ve lost 20 percent of our oil industry jobs in the last two years, but that’s not all; small businesses that provide support services, clothing retailers and restaurants – every corner of our economy are feeling the downturn,” said Sen. Giessel. “Alaskans are worried about their livelihoods. I was particularly struck by the testimony of a single mother who works in Anchorage as an engineer for a contracting firm. She reminded the committee that ‘Big Oil’ is made up of ‘little people’ like her, contributing to our economy and working hard to keep the North Slope growing.”

Two expert consultants who spoke to the Legislature on Saturday also affirmed that increasing taxes in this low-price environment is detrimental to the industry. They agreed that it could compromise some of the investment that drives new production and maintains a steady flow of state revenue, even with these low prices. The current tax system, SB 21, has proven successful, reversing a decline in production from the largest North Slope fields and increasing total production by nearly three percent last year, with similar increases anticipated this year.

The Senate Resources Committee will continue its work on the oil tax legislation this week.

For more information, contact Senate Majority Press Secretary Daniel McDonald at (907) 465-4066.


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