Alaska Gov. Palin to sign oil tax hike bill Wed.
Wed Dec 19, 2007
Alaska Gov. Palin to sign oil tax hike bill Wed. | Reuters
ANCHORAGE, Alaska, Dec 19 (Reuters) - Alaska Gov. Sarah Palin was expected later Wednesday to sign a tax bill that boosts taxes on the state's oil producers despite warnings from the industry that the measure will hurt future investment.
The measure replaces legislation passed in 2006 that many Alaskans believe was tainted by a corruption scandal that has engulfed the state's largest oil services company and resulted in the conviction of three former legislators as part of a widening federal bribery probe.
"This bill gives us the financial tools to save and invest in our future. By receiving an equitable share for our resources, we are now in a position to demand more accountability and seize opportunities to save for future generations," Palin said in a statement Wednesday.
Oil producers and their supporters argue that the increased tax will chill future investments that are needed if Alaska is to replace declining production.
ConocoPhillips Inc (COP.N: Quote, Profile, Research, Stock Buzz) announced last month it was canceling a $300 million investment to improve the quality of diesel fuel used on the North Slope, blaming the new tax legislation for making the investment too costly.
Oil major BP Plc (BP.L: Quote, Profile, Research, Stock Buzz) has said it plans to review all of its investment program as well although consultants hired by the government say planned investments in Alaska's aging Prudhoe Bay and Kuparuk fields would still be highly profitable under the new tax legislation.
$1.5 BILLION BOOST
The tax rewrite, which the state expects will boost revenues by $1.5 billion this fiscal year, raises the basic state oil production tax by 2.5 percentage points to 25 percent and eliminates many deductions enjoyed by the industry under previous legislation. Continued...


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