Alaska Senate Majority discusses corporate tax bill

FAIRBANKS, Alaska (KTVF) - The Alaska Senate Majority held a press conference Tuesday, March 28, highlighting issues facing the state’s legislature.

Corporate taxes took center stage, as senators discussed a bill designed to eliminate a tax loophole. The bill has been sponsored by the Senate Rules Committee.

According to Committee Chair Senator Bill Wielechowski, for decades every major producer on the North Slope paid 9.4 percent in income taxes.

However, some companies are believed to be using the S Corporation loophole to avoid paying that full rate. “That’s costing us about $139 million this year, and so this was actually a recommendation from our non-partisan Legislative Finance Division to eliminate the ‘S Corp’ loophole, and this is one of the provisions that is included in the bill.”

The bill also includes a lowering of the oil tax credits put in place by the legislature in 2013.

Wielechowski said in that year the Senate voted for a $5 per barrel tax credit for producers, before that amount was raised to $8 per barrel in the House.

With 154 million barrels of oil flowing through the pipeline in a year, every dollar down or up in that tax credit either gains or loses the state $154 million in revenue.

According to Wielechowski, the price estimates used to determine the 8 dollar tax credit haven’t been seen much in the state since then. “The bill was modeled at $90, $100, and $120 oil, which was, according to the revenue forecast, where we were expected to be going forward. Unfortunately, we’ve, in those roughly 10 years since then, we’ve only had about 19 months where we’ve been in that range, and so the vast majority of time, we’ve been below that, and under the current tax structure, when the price of oil declines, the tax credits actually increase, and so we’ve been in this 8-dollar-per-barrel tax credit for most of the time,” the senator said.

The bill has been referred to the Senate Finance Committee.

Copyright 2023 KTVF. All rights reserved.