House Rules Committee • CS HB 247 Oil Tax Bill
May 11, 2016 • Anchorage LIO
Good afternoon. My name is Marleanna Hall, and I am the executive director of the Resource Development Council. RDC is a statewide trade association comprised of individuals and companies from Alaska’s oil and gas, mining, forest products, fisheries and tourism industries. RDC members are truly the life-blood of Alaska’s economy. We believe the best approach to expand the economy and generate new revenues for the state is to produce more oil, attract more tourists, harvest more fish, and mine more minerals.
With regard to Committee Substitute HB 247, raising taxes on companies that are reporting record losses and are in negative cash flow is not sound fiscal policy.
Increasing taxes on our natural resource industries will not increase production for the Trans Alaska Pipeline System, it will not encourage the development of new mines in Alaska, it will not attract more tourists, and it will not increase investment in the fishing industry. Higher taxes in this low-priced commodity environment will likely deter investment and lead to lower state revenues and a weaker private sector over the long run.
As you’re aware and have heard over and over today and the last four months, the oil industry is struggling with low oil prices and tight capital markets. Companies are cutting budgets and making tough investment decisions. Increasing taxes on the industry at this time will jeopardize new investment, further damaging our private sector economy.
This morning, Kara Moriarty with AOGA asked the questions that should be asked: Will the CS increase investment, jobs, energy security, production? Because that is what is vital to Alaska’s future. Changing the tax regime now will make a bad situation worse.
When you incentivize something, you get more of it. We need to incentivize the industry to drill more, create more wealth, create more activity, and aim for next year's production to be even higher than this year's.
The current tax policy has brought new exploration, jobs, and continued investment to the state. The oil industry is truly the foundation of Alaska’s economy and keeping it strong is the key to sustaining the private sector, Alaskan jobs, state government, and the overall economy.
Conversely, this bill moves us in the wrong direction. It represents the sixth major tax change in Alaska in the last 11 years. Make no mistake, this CS fundamentally changes the entire tax system again.
My members are not asking for a tax decrease during this time of low commodity prices like other states and countries are considering, but we do request that as the state considers changes to tax policy, it do no harm to the state’s largest industry.
I thank you for the opportunity to offer RDC’s perspective on CS HB 247 today and urge you to reject this legislation.