Legislature hears public views on tax

Companies, workers tell lawmakers not to rush judgment

Posted: Wednesday, October 24, 2007

Alaska companies and workers in the oil industry cautioned the Legislature on Tuesday evening to not be hasty in abandoning the Petroleum Profits Tax on the oil industry - though a few speakers also called for higher taxes.

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The Senate Resources Committee met in the evening to take public testimony from around the state from Legislative Information Offices and by phone. Committee members heard from speakers such as Joe Hegna, a vice president of MWH Global, an engineering firm working in the oil and gas industry.

"PPT has already generated a billion dollars in state revenues," Hegna said. He testified in person in Juneau.

Hegna acknowledged it was important to remove the cloud on PPT caused by indictments of several legislators, but he said the tax wasn't broken.

"What's broken here is there isn't enough investment," in Alaska, he said.

Lynn C. Johnson of Dowland-Bach, also testifying in Juneau, said his 33-year-old Alaska manufacturing company gets 71 percent of its revenues from the oil and gas industry. He urged the senators to not raise oil taxes, because they risked raising them too far and hurting the state's business climate.

"We're never going to know, until after the fact, that we've increased it an inch too far," he said.

The PPT was only adopted 14 months ago, he said, and it is too soon to be changing it.

"Let's give it a little more time," he said.

Several callers echoed those sentiments.

"Now is not the time to be raising taxes on the oil industry," said Chris Humphrey of Anchorage.

With oil production declining, tax policy should be designed to encourage finding and developing new oil resources, he said.

"Without new investment, it won't matter what the oil tax is," he said.

Joe Mathis, also of Anchorage, said he owned a campground with seven employees. He was worried that tax increases would ripple through the economy, and could only hurt his business.

"Increased taxation will not improve the business in our campground," he said.

Don Benson of Mat-Su said the public wanted legislators to take a fresh look at PPT. In a recent Channel 2 poll, 72 percent supported that, he said.

"You need to revisit PPT," Benson said.

Jerry McCutcheon said he'd like to see the state tax its oil at rates approaching 90 percent.

"Taxes are far too low," McCutcheon said.

But Lowell Humphrey of Anchorage urged the legislators not to "dramatically increase taxes for the third time" in recent years.

The PPT, he said, brought in $800 million more than the previous tax in its first year.

The industry is too important to risk with a tax increase, he said.

"What's good for the (oil) industry is good for the citizens of Alaska," he said.

• Contact Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.

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