Tax Cuts Eyed to Boost Oil

Gov. Sean Parnell wants to tinker with Alaska’s cash cow, offering lower tax rates on petroleum production in the hope of attracting more investment from oil companies.

The lion’s share of Alaska’s general fund revenue comes from oil taxes. High oil prices have helped the state squirrel away some $14 billion in reserves, helping it land an upgrade to Aaa from Moody’s Investors Service in November. The state has AA-plus rating from Standard & Poor’s and Fitch Ratings.

Parnell wants to lower oil production taxes that were raised at the urging of his predecessor, Sarah Palin.

The legislation he’s introduced will increase Alaska’s competitiveness as a “petroleum province,” Parnell said in a news release, adding jobs by reversing recent oil production declines.

“We remain committed to getting more oil into the pipeline and increasing job opportunities for Alaskans,” the governor said.

Provisions include lower tax rates for newly developed oil-production areas and caps to overall production tax rates.

Using the most recent production assumptions, the tax cuts would reduce revenue to the state by more than $3.8 billion over the next four years.

The state would achieve a “more competitive investment climate for job creation,” Parnell said.

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Alaska
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