Alaska News

Let's give Alaska oil tax reform a chance to work

The oil tax debate in Alaska continues on, as advocates seek a referendum to undo recently passed oil tax reforms. This effort is based on concerns over state revenues and our ability to fund important public services, the fear of personal income taxes and cuts to the PFD, lack of commitments from the oil companies about their plans to invest in Alaska and to hire Alaskans, and a basic mistrust of the oil industry. The effort is running against the endorsement of oil-tax reform from employers across the state since 2010, public opinion polling consistently in support of reform, election of reform-minded legislators in 2012, formation of a pro-reform statewide coalition in the state Senate in 2013, and finally the recent passage of SB 21, the More Alaska Production Act.

That there is continuing debate over oil-tax reform should not be a surprise given the deep-seated economic and political issues at stake. From the founding of our country up to today -- in Washington, D.C., and here in Alaska -- we experience the predictable tension between ideologies and policies that differ fundamentally over such issues as the role and extent of government in our economy, short- versus long-term perspectives on investment and taxes, "harvesting" now or creating conditions for long-term gain, dependence or independence.

Our debate over oil taxes in Alaska reflects that basic tension. And like most such tensions, there are merits on both sides. Yes, it's our oil, but we need the oil companies to get it out of the ground and to market so the value of the oil can be monetized. Yes, we want the oil companies to pay their fair share, but we cannot tax them to the point where they invest their capital elsewhere. Yes, we need the tax revenue to fund state services, but at the risk of expanding those services to the point where they are not sustainable. Yes, we want the oil companies to assure us they will increase investment in Alaska if we reduce the tax burden, but oil companies are no different from any other business in terms of seeking the maximum return on investment. Yes, we want the oil companies to hire more Alaskans, but we need to provide them a skilled workforce. Yes, we want the oil companies to risk more of their capital here in Alaska, but we need to provide them a stable tax regime.

We do not know that the incentives in SB 21 will work. We do know, however, that ACES undermined Alaska's competitiveness as a place for oil companies to invest, resulting in a steady decline in production of the state's economic life blood. But that decline is reversible. Through SB 21, we have taken a calculated risk that by reducing our take from the oil companies, they will make decisions and take actions that will increase production, increasing the flow of oil through the pipeline in a way that benefits them and us.

Let's give SB 21 a chance to work.

Jim Johnsen is a member of the Make Alaska Competitive Coalition's steering committee.

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