Contact the Governor
Frank H. Murkowski
Juneau Office
P.O. Box 110001
Juneau, AK 99811
907-465-3500 phone
907-465-3532 fax
State info 907-465-2111
Anchorage Office
550 West 7th Avenue, Suite 1700
Anchorage, AK 99501
907-269-7450 phone
907-269-7461 fax
State info 907-269-5111
Kenai Office
11312 Kenai Spur Hwy, Suite 2
Kenai, AK 99611
907-283-2918 phone
907-283-3037 fax
Mat-Su Office
877 Commercial Drive
Wasilla, AK 99654
907-352-2585 phone
907-352-2526 fax
Fairbanks Office
675 7th Avenue, Suite H5
Fairbanks, AK 99701-4596
907-451-2920 phone
907-451-2858 fax
Washington DC Office
444 North Capitol NW, Suite 336
Washington, DC 20001-1512
202-624-5858 phone
202-624-5857 fax
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Volume 2February 27th, 2006
Oil Tax Bill Long Overdue.
Why it's needed: It's been almost 17 years since the state last updated its oil taxation laws. Almost everyone agrees
that the current production tax system and its Economic Limit Factor, or ELF, is outdated and no longer reflects the
current oil price environment. That is one reason why Governor Murkowski's petroleum production tax is getting so much
attention. Another reason is that the state's oil production taxes make up 25 percent of state oil revenue.
The Governor's bill "modernizes" the state's oil tax system because it recognizes that after almost 30 years of production
from large fields like Prudhoe Bay, future exploration and development of oil in Alaska on state lands will likely be in
smaller and mid-size fields in the 50 million to 150 million barrel range. These fields are attracting the interest of
smaller and mid-size oil companies. In order to keep oil company profits here in Alaska, the Governor's bill provides
incentives for companies that reinvest back in Alaska. Therefore, these smaller and mid-size companies will find Alaska
a good place to do business. This is good for Alaska, good for the state treasury, and good for Alaskans who will find
employment with these companies.
How it works:
- Governor Murkowski oil tax plan would replace the state's current production tax with a tax on oil companies'
net profits. Net profits (the amount of the companies' revenue minus their expenditures) are taxed at 20 percent.
This would amount to a doubling of the effective tax rate and is estimated to bring in $1 billion additional revenue
every year to the state, at current oil prices.
- Companies that invest in Alaska are given a tax credit of 20 percent on those capital expenditures. The 20/20
percentage rates do not cancel each other out, because one is a percentage tax of the net profits, while the other
is a percentage credit on capital expenditures made.
For examples that illustrate how two different companies would be taxed under this system, view this PPT Basics PDF.
Weekend Public Testimony Shows Support for Governor's Oil Tax
On Saturday, individuals from Anchorage, Petersburg, Haines, Kenai, Palmer, Fairbanks and Valdez participated in public
testimony on the Governor's oil tax bill. Many applauded the Governor for his leadership in proposing to modernize Alaska's
oil tax system. In addition, it was noted that his bill both increases revenues to the state and encourages investment.
Visit the oil tax website for information on the bill. And check back often, new information is added daily:
http://www.gov.state.ak.us/oiltax/
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