Anchorage Daily News

The anti-oil populist movement is not new to Alaska. The so-called “backbone” folks have always been with us. But now they are in charge. And that has led us to an all-out war with the oil industry.

The first attack: The governor gets legislation passed shutting out the producers from the process of building the gas pipeline. This will end up hurting us more than them because the oil industry can go other places to get gas to market.

But the governor’s second major offensive in her “Operation Oil Companies Bad” campaign will hit the industry hardest.

After the industry has already invested $50 billion in infrastructure in our state and pumped close to $80 billion into state coffers, the governor has cut them down at their knees.

The tax increase coming out of Juneau last week is enormous. It proves the governor’s strategy is now abundantly clear. Higher taxes, bigger government are the keys to our economic future.

The governor has allies in the Legislature made up of three camps. There are those like the governor who believe some consultants who say higher taxes do not influence investment. The problem is these consultants come from the world of theories, not real life.

Politicians who fall into the taxes-don’t-affect-investment theory believe they are doing the right thing but are not real bright. The second camp is made up of pure socialists, those who think “corporate America bad, government good.”

Rep. Les Gara said on my talk show he thinks we should tax the oil companies at 80 percent.

Under the former PPT plan, the industry paid about 63 percent to government. The governor’s new PPT plan raised the rate to about 68 percent. But on Friday the Legislature’s version of the governor’s bill raised the government share to more than 70 percent. That leaves only one branch of government, the judiciary, to make Gara’s 80 percent rate dream come true. With this Supreme Court, anything is possible.

The third camp of tax-and-spend politicians is the one that bothers me the most. They do it to increase their power. These panderers know the billions of extra cash they are transferring from the private sector to government will allow them to make the media and big labor happy by growing the operating budget even more.

This special session will end up being a windfall not for the public, but for the state’s public employee unions.

For the average Alaskan going to work every day, trying to support a family, hoping their kids’ kids will have a future here, this massive tax increase represents a huge risk.

The oil industry as a whole paid $1 billion in production taxes in fiscal year 2006. With the new PPT plan the industry will next year pay $4.5 billion dollars in production taxes.

Let me ask you a simple question. Would a 400 percent tax increase affect your ability to invest your money? This is not brain surgery, folks.

But the worst part of the new PPT plan is the standard deduction. It severely limits the industry from deducting expenses, making future projects far less attractive. But that’s not what this is all about anyway: future investments. It’s nothing more than a money grab. With this new plan, the state is expected to bring in a total of almost $8 billion in revenue from the industry in fiscal year 2008.

You think the governor is popular now, wait until she starts divvying up all those billions to those with their hands out. Public employee unions may erect a Sarah Palin shrine. They can place it next to the one the media built.

But I believe history will prove this shortsighted tax-increasing frenzy will lead to real pain and heartache down the road. I know this is a radical concept anymore in America, but the truth is that taxes do deter investment. Taxation is the power to destroy. I am confident we will someday reverse what was done last week in the Legislature. The only question is, will it be in time to save our economy?

Dan Fagan is a talk show host on KFQD AM-750. E-mail dan@kfqd.com.

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