Politicians need to represent the best interests of their constituents. I believe legislators had good intentions when they passed the law regarding oil production taxes and credits. The rationale was that major oil credits and production taxes favorable to the oil industry would result in increased production. The increased oil production didn’t materialize, and the new argument was the great breaks for the oil industry tax rates and credits now are to maintain the existing level of oil production.
In short? Alaska lost. Alaska took a chance and lost big. Alaska lost its $18 billion savings to maintain an exceptionally large government budget over the past decade. Alaska also lost the income to the state if the legislators did not buy into the idea of trading major tax breaks and passing lucrative tax credits to the oil industry on taking a chance on increased production.
The better way for tax breaks and credits would have been and should always be on past performance. Had the oil industry increased production, the tax rates and credits would be available as rebates. I would have no problem with rewarding companies with rebates on taxes and credits for Alaska capital investments for increased oil production.
— Harold Borbridge
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