Joe Paskvan’s Nov. 21 opinion piece on oil taxes (“Oil’s broken promise: Alaska’s fair share”) presents an accounting misperception. Paskvan stated that production taxes are negative. This is not true.
1. The production tax revenues in fiscal 2020 are expected to be $479 million, after subtracting the per-barrel credits. Quite positive. Petroleum revenues from all sources will total $2.2 billion. (The per-barrel credit is not really a credit. It tempers the effective overall tax/royalty rate to make it progressive. The same result could have been obtained with a steadily increasing tax rate instead.)
2. There is a backlog of $732 million of other past credits to eventually be purchased by the state. These credits are no longer in effect. (If the courts approve bonding to repay them, they would be paid off over 10 years.) These are liabilities that will not go away, even if the tax initiative passes. This is a balance sheet issue, not an income statement — cash flow — issue.
3. Going forward, after 2020, essentially no more credits — other than the per-barrel credits — will be generated under the current system. I am not sure it is wise to vilify one tax for the grievances toward another.
— Roger Marks
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