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 6March 15th, 2006
House Resources Committee makes changes to petroleum production tax proposal
After many long hours of work reviewing the Governor's proposed petroleum production tax, the House Resources Committee
released a summary of the changes to the bill that will become the "committee substitute" for House Bill 488.
Since the Governor introduced his legislation aimed at modernizing the state's oil production tax system and to
increase exploration and development of the North Slope, members of the House Resources Committee have been working
overtime on the measure.
The House Resources version makes some significant changes
including an oil price sensitive sliding tax rate. Once oil reaches $50 per barrel, for every additional dollar
above that amount the original 20 percent tax rate would increase by 0.3 percent. At $70 per barrel the tax
rate would be 26.5 percent. The rate would continue to escalate with higher prices topping out at 50 percent
at prices at about $150 per barrel. It also changes the "transitional" provisions and $73 million allowance, or
"standard deduction." For other changes made in the committee substitute, review the following acrobat file (PDF).
Upon learning of the committee substitute, Governor Murkowski acknowledged the hard work of the Legislature on behalf of Alaskans.
“I first want to recognize the long hours and hard work the House Resources Committee has put into this piece of
legislation," Murkowski said in a prepared statement. "Modernization of our petroleum production tax is one of the
most critical issues this body will face – and they have approached it with dedication befitting its importance.
While I have some concerns over the committee substitute, it is merely a first step in the legislative process toward
achieving our mutual goal: a production tax that provides Alaska with needed revenue, while ensuring strong incentives
to increase oil production.
"The bill I proposed – with its 20 percent tax rate and 20 percent tax credit, strikes a fine balance between a rate
that ensures Alaska a fair share, and one that provides a climate for continued investment in order to arrest the ongoing
decline in oil production.
"This production tax bill is important on its own merits. But I also remind Alaskans that it is key to the gas pipeline. Oil
taxes provide us revenue today, but it is the gas pipeline that will shape our future.
"I encourage the Legislature to keep up the pace, to continue working hard on this new version of the bill, and ultimately
to pass petroleum production tax legislation that will stand alone as good tax policy now and enable us to move forward on
the gas pipeline in the future.”
Stay tuned to the House Resources Committee schedule. The Committee is scheduled to take testimony today from the oil industry on the committee substitute. For a schedule please visit Gavel to Gavel.
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