Economy

Alaska Gov. Parnell seeks incentives for oil companies

Gov. Sean Parnell is asking the Legislature to change Alaska's oil tax laws so the companies won't have to pay as much in taxes if they spend money to drill. It's an incentive that could cost the state treasury hundreds of millions of dollars.

Parnell said Thursday he doesn't want the tax rate lowered, but does want tax credits for investments. His announcement comes as the oil companies and many Republican state legislators maintain Alaska's oil taxes are too high and are driving away investment. This will be a battlefront in the legislative session which begins next week and in this year's governor's race, with candidates running on opposite sides of the oil tax issue.

Parnell said a new Department of Revenue study found the oil-tax system generally works well and that oil companies are increasing investment and jobs in the state. But he said there are incentives the state can give to create more economic activity.

"The numbers speak for themselves. Investment has been up in the industry. But frankly it could be better, that's why we are offering incentives and credits," Parnell said.

The Legislature raised oil taxes in 2007 at the prodding of then-Gov. Sarah Palin and created a new system to tax oil company profits that's known as Alaska's Clear and Equitable Share, or ACES. Parnell, who was lieutenant governor at the time, supported ACES and said Thursday all he wants are "refinements" to it.

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