Alaska editorial: Independent look needed at new oil production tax

Posted: Wednesday, May 23, 2007

This editorial appeared in the Anchorage Daily News:

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The corruption investigation makes clear what many suspected: Alaska's new petroleum production tax was born in sin. Two key lobbyists have pleaded guilty to buying support and votes on the issue.

The first round of new oil tax payments to the state makes clear what skeptics suspected: The new oil tax is not working as advertised. Collections fell short of projections by $137 million.

The state's multibillion-dollar oil tax system was born in sin and it's not working as advertised.

So what are state leaders doing about it?

Not enough.

Gov. Sarah Palin's revenue department is looking at the economic questions surrounding the new law, which passed before she was elected. The attorney general is making an "informal investigation" into potential wrongdoing when lawmakers approved the law, according to Palin's spokeswoman Meghan Stapleton. The state, however, can't push too hard lest it complicate the federal investigation, which has not yet run its course.

Too bad Alaska doesn't have a nonpartisan watchdog agency such as the congressional Government Accountability Office. Alaskans urgently need a comprehensive, nonpolitical review of how the new oil tax was passed and how it is performing.

Palin's internal review isn't enough to restore public confidence in this momentous political decision. It's true she doesn't have any pride of ownership in the new oil tax. In fact, as a candidate, she supported a much simpler version, based on gross production, rather than allowing deductions and credits for production expenses and new investment. She was elected as an outsider and a reformer who kept her distance from the oil industry, so she has some credibility on oil tax issues.

Still, she is a politician, and right now, public trust in Alaska politicians is understandably shaken.

What Alaskans need is an independent, blue-ribbon panel, with members of unquestioned integrity and free of partisan affiliations. The panel should have a budget for experts to examine the complicated details of the oil tax. Panel investigators should interview key figures in the Legislature's work on the issue, possibly under oath. They should review every step of the tax's progress through the Legislature and check for outward signs of undue influence behind the scenes.

The corruption scandal has raised a host of legitimate questions about the new oil tax law. Palin and this year's lawmakers have good reason to revisit what last year's Legislature decided. But they can't make sound decisions about any changes until Alaskans get reliable, independent answers to those questions.

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