Wielechowski defends ACES tax

Senator challenges industry to boost drilling in Alaska, claim tax credits

Posted: Thursday, March 24, 2011

Alaska’s ACES oil tax, under attack by Gov. Sean Parnell and the oil industry, is fair, competitive, and why Alaska has a healthy budget surplus, said Sen. Bill Wielechowski, D-Anchorage.


Passed in 2007 under the governorship of Sarah Palin, Alaska’s Clear and Equitable Share tax significantly raised the state’s oil severance tax.

That happened just before oil prices rose to record levels, sending a bigger share of oil profits into the state treasury.

The ACES tax has raised about $11 billion more that the previous tax since it has been in place, and has provided the state with about $11 billion in savings — not counting the Permanent Fund — to help buffer the state against future downturns, Wielechowski told the Native Issues Forum at the ANB Hall Wednesday.

“That can be attributed almost completely to the fact that we have ACES,” he said. “If we didn’t have ACES, we would be in deficit spending this year.”

Wielechowski, co-chair of the Senate Resources Committee, has been a key player in the debate on Parnell’s tax cut proposal, now being heard in that committee.

Without mentioning the governor who first proposed the ACES tax, Palin, Wielechowski credited it with the state’s current fiscal health.

Without ACES, he said, “We would have been in deficit spending for the last three years.”

Wielechowski challenged claims by the oil industry and its allies that Alaska’s oil tax system made the state uncompetitive with other places in which they can do business and is discouraging investment in Alaska.

The industry made billions in profits in Alaska before ACES, at a time when many fields had a zero tax rate, but didn’t reinvest it in Alaska, Wielechowski said.

“They were taking the money they were making and investing in places like Venezuela and Ecuador,” he said.

“Guess what happened to that investment? Those countries expropriated their assets, and ‘expropriation’ is a nice word for confiscated,” Wielechowski said.

A better investment would have been Alaska, he said.

“Alaska is a much more stable place to do business,” Wielechowski said.

Smaller companies, which are interested in exploring for oil in Alaska, are the state’s future, he said.

ACES includes enormous tax incentives to promote additional exploration and drilling, he said.

Since ACES was adopted, the number of companies active in Alaska has increased significantly, he said, with smaller companies aggressively seeking the ACES tax credits to do the exploration that the big producers have not done.

“The future of the North Slope is these smaller, wildcat companies,” he said.

Those incentives are available for any company, and the big producers such as ConocoPhillips Co., BP p.l.c. and Exxon Mobil Corp. can lower their total tax rate by spending more on exploration, he said.

• Contact reporter Pat Forgey at 586-4816 or Patrick.forgey@juneauempire.com.

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