If Senate Bill 21 is not repealed it will soon be goodbye dividends and hello income tax.
The money Senate Bill 21 gives back to BP, ConocoPhillips and Exxon will leave Alaska with about the same amount of income Alaska had from oil in 2002 when the discontinuation of dividends and re-imposition of the income tax was the primary issue of the 2002 Governor’s Race.
According to the U.S. Department of Energy, the average tax charged by countries around the world for taking a barrel of their oil is about 79 percent of the cash remaining for distribution between oil companies and governments after all expenses of production and delivery for that barrel have been deducted from its sale proceeds and paid. According to the U.S. Department of Energy’s calculation, take-home profits for companies like BP, ConocoPhillips and Exxon average about 21 percent of what’s left over after expenses.
Governor Parnell, in a speech to oil industry workers, stated Alaska’s combined federal, state and local tax was taking 72 percent of the remaining distributable cash prior to the passage of Senate Bill 21. What Parnell didn’t say was that Alaska’s federal state and local take was 7 percent below the international average; he just said it was too much.
Senate Bill 21 will leave Alaska somewhere between 20 and 25 percent below the international average and teetering on bankruptcy. Senate Bill 21 will give BP, ConocoPhillips and Exxon close to 45 percent of the distributable cash remaining after expenses; over twice their expected international average. Remember that year every Alaskan got a $3,200 dividend? That happened because Gov. Sarah Palin put an extra billion dollars into our Permanent Fund dividend. If the approximate one and one half to two billion dollars Senate Bill 21 gives to the oil companies were given to Alaskans instead, every Alaskan would be getting between four and five thousand dollars per year.
Unfortunately Parnell and the Legislature chose to favor BP, ConocoPhillips and Exxon with one and one half to two billion dollars and you are likely to lose your dividend and get slapped with a big fat tax because they did.
• Ray Metcalfe was in the Alaska State Legislature in the 1970’s and 80’s and has been studying, writing, and lecturing to educate Alaskans on international oil tax policies and the value of Alaska’s resources for more than 25 years. He is now one of the hundreds of Alaskans working on the referendum to place the repeal of Senate Bill 21 on the 2014 August primary ballot. He can be reached at RayinAK@aol.com.