Chamber lobbied on oil tax

Alaska Oil and Gas Association rep. asks for no taxation increase

Posted: Friday, October 19, 2007

The deputy director of the Alaska Oil and Gas Association urged Juneau's Chamber of Commerce on Thursday not to support raising oil taxes, saying lawmakers should pass a tax policy that encourages investment.

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Touting a "Jobs not Taxes" slogan, Kara Moriarty emphasized during the chamber luncheon at the Hangar Ballroom that over the next decade, the oil industry will have to make large investments in developing new sources of oil just to maintain current production levels.

The speech came on the same day Alaska lawmakers will begin considering a new proposal by Republican Gov. Sarah Palin to raise oil taxes. With a plan called Alaska's Clear and Equitable Share Act, the governor wants to raise the tax on net profits from 22.5 to 25 percent.

The oil industry is paying almost $1 billion more in state taxes this year than previously, but that falls $800 million short of how much the new Petroleum Profits Tax, passed last year, was expected to generate.

"We've heard some in the administration say, and legislators say, that they feel the PPT is broken. Does the industry feel that way? We do not," Moriarty said.

The North Slope this summer was busier than it has been in a long time, and investment and activity were high, she said, despite the increase in taxes. One member company has tripled capital investments since 2005.

"That was what the Legislature intended when they designed this net-based system, that you would get more revenue when oil prices were high, but you would also get more investment," Moriarty said.

Since the law was passed last year, two top VECO Corp. executives have pleaded guilty to bribing Alaska lawmakers and said they paid several legislators to influence the debate over PPT last year.

Palin has said the tax passed at the urging of the former oil industry executives is tainted. She also has said it's not bringing in enough money.

Murray Walsh, of Walsh Planning and Development Service, said Thursday the "VECO mess" is another reason why the special session is being held. He asked Moriarty to give VECO a personal "horse whipping."

"I don't believe this, but I believe other people believe the whole oil industry is tarred by what happened with VECO. So there's (the perception that) the current PPT was hatched in back rooms and it's got to be fixed because it couldn't be right because of all this criminal behavior. Make us feel better that the whole industry is not like VECO," Walsh said.

Moriarty responded that the industry conducts itself on "a very high ethical and moral standard."

"Unfortunately, we have found out that we had a couple of bad apples last session. Does that mean the whole bunch in the Legislature was corrupt? We don't believe so," she said. "The Legislature needs to recognize that when the votes were taken at the end of the day. The PPT was a compromise."

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