Murkowski administration plans oil-tax study

Posted: Monday, June 14, 2004

The state is studying whether the state should change its tax policies to try to spur more oil company investment here. A legislative committee also is looking at the issue.

Dan Dickinson, head of the Department of Revenue's tax division, said oil companies are not spending enough money in the Alaska oil patch now to generate the kind of future growth Gov. Frank Murkowski wants to see.

The department will look at whether shifts in the state's tax system can prompt changes in companies' investment decisions, Dickinson said.

The state also will look at the economic limit factor, an element of the state's oil production tax that some Democrats argue should be changed because it allows too many new oil fields to escape production taxes.

Administration officials say they'll look at that simply because it's part of the overall tax picture. Changing the economic limit factor, know as the ELF, strictly to raise more state revenue is not the goal of the study.

"Getting more money by changing the ELF is kind of a shortsighted vision of the state's fiscal regime," said Steve Porter, deputy commissioner in the Department of Revenue. "What we're looking at is trying to determine from a longer-term perspective, do we need to restructure, and if so how would we do that?"

The state receives money from oil fields through production, property and income taxes, as well as royalties.

Rep. Les Gara, D-Anchorage, was one of six Democrats who sponsored legislation this year to change the ELF.

Gara said Friday that at current high prices the oil industry is taking in about $1.4 billion more from the state's oil fields than Alaska is, and that is not a fair deal for the state. Gara's bill did not pass this year.

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