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Charlie Huggins: Alaska's oil tax cut is working, give it a chance

  • Author: Sen. Huggins
  • Updated: June 29, 2016
  • Published August 15, 2014

A 'No' vote on Ballot Measure 1 will continue Alaska down the road to economic prosperity. It also represents a simple acceptance of the facts: ACES failed, while SB 21, also known as the More Alaska Production Act (MAPA), essentially stopped the drop in North Slope oil production and is currently attracting billions in new investment.

I voted against ACES back in 2007 due to its major flaws. Seven years later, the policy has been proven to be a failure. In 2013, the last year of ACES, oil production plummeted by 8 percent, representing a loss of $1.8 billion. Alaska's gross domestic product also declined 2.5 percent, making it the only state in the nation to see economic decline.

After only eight months under the new oil tax reform, however, the 24-year decline in North Slope oil has finally abated, six new rigs have come online, and Alaska has seen a staggering $10 billion in newly planned investments, which will mean more revenue.

The new investment dollars are no coincidence, but purposely built into the blueprint of oil tax reform. SB 21 directly ties tax credits to oil production by requiring oil companies to put new oil through the pipeline before getting a tax break. Under ACES, tax credits were paid out to the oil companies for capital spending, which meant the state of Alaska was giving oil companies billions of dollars with no guarantee of new oil. In fact, if we revert back to ACES, Alaskans will have to dole out nearly $1 billion in tax credits for spending on Point Thomson.

It's suggested we can simply go back and tweak ACES, despite its massive flaws, but there's no such thing as a small change in the tax system. It will be a difficult, potentially multiyear process, resulting in the third change to the Alaska oil tax system in eight years, creating yet more instability. Stability, after all, is a key element to remaining competitive because businesses need a stable tax regime when making long-term plans.

Alaskans should be proud their legislators responded to the failures of ACES and supported oil tax reform in a bipartisan final vote (12 to 8 in the Senate). In fact, I do not know of a single legislator in the state of Alaska who believes ACES was not flawed. Eight months into oil tax reform, we're now seeing the positive effects of the major resurgence of investments on the North Slope.

These developments under the new oil tax reform add up to a big win for Alaska. With an economy fueled by a healthy oil industry, we'll have more high-paying jobs for Alaskans and more funding for education, roads, law enforcement, and basic infrastructure in the future.

And this is just the beginning. Oil tax reform will build a bridge into the future toward development on the outer continental shelf and hopefully ANWR.

I urge my fellow Alaskans to cast their votes based on the facts and common sense, not empty rhetoric and scare tactics. The people of Alaska must make a decision. A 'Yes' vote will regress to a tax system we all know was a failure. A 'No' vote will tell the rest of the world we are open for business and on a path toward longterm economic prosperity, guaranteeing the Alaska Permanent Fund will continue to grow, more Alaska businesses will prosper, and all of our children will reap the benefits. I encourage every Alaskan to check the "No" box and give oil tax reform a chance to work.

Alaska Senate President Charlie Huggins (R-Wasilla) has served since 2004. He leads a caucus of 13 Republicans and 2 Democrats.

The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)