Rep. Gara Calls for Corrections to Fibs in Oil Tax Ads

Rep. Gara Calls for Corrections to Fibs in Oil Tax Ads

(ANCHORAGE) – Today Rep. Les Gara will address the Bartlett Club, at Denny’s on Debarr Road at noon. To curry favor for the Governor’s proposed $8 billion in unjustified oil company tax reductions over the next five years, fancy industry ads are on the air that mislead Alaskans. “We think Alaskans should be told the truth. You can make up your own opinions, but you can’t make up your own facts,” said Rep. Gara, who, with others, has proposed tax policies that won’t allow breaks unless they lead to more jobs, and more production and exploration.

The Three Ad Fibs by the Group, “Make Alaska Competitive”

In its latest numbers, the Department of Labor has contradicted claims by the Governor and oil industry members that Alaska oil and gas jobs are in decline. The department confirmed that oil and gas jobs rose to 12,900 employees in March, a 5% increase since last year. That’s within 100 jobs of Alaska’s all-time high. But data from the Department of Labor also shows that over 50% of the new jobs on the North Slope are going to workers who live outside Alaska.

“The ‘Make Alaska Competitive Coalition’ ads and the Governor have painted a picture of falling jobs to justify the biggest giveaway of state oil revenue in Alaska history. We’re calling on those behind the current ad campaign to concede oil and gas jobs have risen under ACES, not, as they imply on their TV ads, fallen,” said Rep. Les Gara, D-Anchorage. That request was made in writing to Jim Jansen, who is on the industry group’s steering committee.

Likewise, the ads have falsely claimed Alaska imposes a production tax under ACES of over 80%. “That’s the second fib,” said Gara. The ads used the misleading term “marginal tax rate”. Alaska’s production tax rate is 25%, and rises as windfall profits rise at high prices, so the state gets a fair share of those windfall, record profits. While the “marginal” rate measures the rate between oil at, for example, $100 to $101 per barrel – i.e., the tax on that highest dollar, that’s not the tax rate actually paid by oil companies. After credits and deductions, the actual tax rate normally ranges from 25% to 40%. “Industry should come clean. You can’t call a 30% – 40% tax a 90% tax to scare people,” said Gara.

Finally, Governor Parnell’s proposal gives tax breaks whether or not companies increase their investment on the North Slope. He initially claimed it would increase new “exploration wells” in new areas. But testimony in response to Rep. Gara’s questions to British Petroleum and Exxon, they likely would drill no new exploration wells under the Governor’s bill. The Governor’s bill grants the tax breaks whether or not companies take the $8 billion in tax reductions out of state, and invest it in Azerbaijan, Brazil, or North Dakota, or whether they make the same level of investment they would have anyway in Alaska.

Gara has proposed that tax breaks be tied to investment in new exploration wells, and in new production facilities needed to make new wells economic to produce. In addition, Gara proposes, as have others opposed to the Governor’s proposal, that breaks be given to companies that increase their Alaska well-related expenditures over their last three-year average.

“Tax breaks that let oil companies take our money, and give it to their shareholders, or spend it out of state make no sense, and are a pure giveaway. Tax breaks that require increased Alaska exploration, and increased Alaska spending, will lead to more jobs, more production, and do make sense,” said Gara.

For more information, contact Rep. Gara or aide Rose Foley at (907) 269-0106 or at Representative_Les_Gara@legis.state.ak.us

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