The governor’s bill (SB 227) previously included legislation to, among other things, create a state sales tax and remove corporate income taxes entirely. These provisions have been removed from the bill by recent amendments made in the Senate Resources committee. Instead of disproportionately taxing lower income Alaskans with a regressive sales tax, the bill now contains legislation that fairly taxes oil and gas companies who can certainly afford it. The improved version of SB 227 now incorporates active legislation that was introduced last year such as closing the S-corp loophole (SB 92) and reducing the maximum per-barrel oil tax credit to $5 (SB 112). These are much welcome changes that together would increase the state’s revenue by roughly a half of a billion dollars every year by simply requiring oil and gas producers to pay their fair share for profiting off of Alaskan’s resources. These changes are supported by a recent study that found that taxing oil and gas companies is the least impactful way to address Alaska’s fiscal crisis.

In addition to incorporating SB 92 and SB 112, the revised SB 227 would increase the oil tax floor from 4% to 6% and eliminate the ability for companies to receive credits that enable them to go below this rate. If passed, oil companies would be taxed based on the value of the oil extracted from the state instead of the profits the company gained which is inline with legislation from many oil producing states (e.g. Texas and North Dakota). While oil companies will claim that any increase in their taxes will decrease their ability to work in Alaska and they might just have to leave the state, we know that isn’t true. Currently, Alaska is the most profitable oil jurisdiction in the world and that is largely due to the fact that Alaska does not tax oil companies. We need to stop subsidizing the gangbuster profits of oil companies at the expense of fundamental public services (e.g. road maintenance, education funding, a functional marine highway system). The changes introduced in SB 227 are common-sense and a realistic breath of fresh air in a stagnant conversation about fixing the broken state budget.