Windfall tax lets Alaska rake in billions from Big Oil
While Congress and the presidential candidates debate the wisdom of a windfall tax on oil companies, Alaska has already imposed one, hauling in billions of dollars in new revenue for the state treasury.
Republican Gov. Sarah Palin pushed for the windfall tax over oil-company opposition.
Most of Alaska's oil production comes from land owned by the state — and leased to the oil companies that look for and extract the crude. But some of the most significant undeveloped resources are in areas owned by the federal government, such as the Alaska National Wildlife Refuge and federal waters in the outer continental shelf. Revenue from oil production there would go mostly to the U.S. Treasury, but the state could claim a small part of it, according to state Department of Revenue officials.
The tax is imposed on the net profit earned on each barrel of oil pumped from state lands, after deducting costs for production and transportation.
The tax is set at its highest rate in Prudhoe Bay, where the state takes 25 percent of the net profit of a barrel when its price is at or below $52.
The percentage then escalates as oil prices rise over that benchmark.
Republicans in Congress this June united to defeat a proposed windfall tax on oil companies, deriding it as a bad idea that would discourage investment in U.S. oil exploration.
Things worked out far differently in the GOP stronghold of Alaska, a state whose economic fate is closely tied to the oil industry.
Over the opposition of oil companies, Republican Gov. Sarah Palin and Alaska's Legislature last year approved a major increase in taxes on the oil industry — a step that has generated stunning new wealth for the state as oil prices soared.
At a time when Americans are feeling the pinch at the gasoline pump and oil companies are racking up record profits, Alaska's choice foreshadows one of the sharpest debates in the upcoming presidential election.
Democrat Barack Obama supports a national windfall-profits tax, while Republican John McCain opposes it.
source:
http://seattletimes.nwsource.com/html/localnews/2008103325_alaskatax07.html