Oil tax déjà vu
It is déjà vu all over again. Oil industry haters are gathering themselves for an attempt to increase oil production taxes for North Slope producers to support ever-bigger government.
The “Vote Yes for Alaska’s Fair Share” initiative campaign aims to strong-arm about $1 billion per year in additional revenue for the state. It was certified earlier this week by Lt. Gov. Kevin Meyer for signature gathering.
If eventually adopted by voters, the Fair Share Act would jack up production taxes on the North Slope’s legacy fields, which account for about 90 percent of North Slope production. Why? Because its proponents believe they can pull it off.
It is as if the hare-brained, punitive Alaska’s Clear and Equitable Share oil tax never happened; as if its hard lesson never were learned.
ACES, brainchild of then-Gov. Sarah Palin and beloved by those who slept through economics class, was so aggressive that in the end, even Democrats agreed it needed work. It was among the highest oil production tax rates in the world at the time. Returning to ACES, or an ACES-like clone, would be beyond destructive.
The Legislature in 2013 adopted Senate Bill 21, oil tax reform, and fixed much of the mess. That reform survived a repeal attempt the next year in a referendum supported by many of the same folks who now want to hit the industry for $1 billion annually to support bigger government and programs and giveaways they adore.
Their short sightedness apparently knows no bounds. There is one immutable truth in all this: A return to ACES or anything like it would mean less North Slope oil production, shrinking investment and fewer jobs. Period.
How can we tell? There inarguably was less oil production in each and every year the confiscatory tax was in effect. After all, it contributed to a 90 percent marginal tax rate at higher oil prices. The industry did then what it would do now – simply shift its investment elsewhere, and, once again, Alaska would languish as oil provinces elsewhere boom. Alaska’s economy would feel the bite.
The answer is not to tax the industry or its investment dollars out of the state. The answer is more production, more revenue-producing oil in the trans-Alaska oil pipeline.
“Fair Share” backers have until Jan. 21 to gather 28,501 signatures to get the question on next year’s statewide ballot. The question for the rest of us is easy.
Do you believe less oil production, fewer jobs and bigger government is what Alaska needs? If so, sign up. If you believe Alaska needs more oil production, more jobs and a healthy economy do not sign.