Dear Neighbors,

After close to two months of review, the Senate has passed the Petroleum Production Tax bill (SB 305) that encourages new oil exploration and production and generates additional revenue for the state.

Senate Bill 305 highlights:

• A 22.5% tax rate on production with a 25% credit rate for capital expenditures.
• Progressivity. The State receives more revenue when the price of oil rises above $50 per barrel.
• Provisions to protect Cook Inlet oil and gas production.
• New tax rate takes effect April 1, 2006.

The bill has moved over to the Alaska House for its consideration. The House Finance Committee began their deliberations on it on Tuesday.

This version of the bill was the product of much debate. The compromises brought about through research and debate were necessary to get a bill that would have enough support to pass the Senate.

The PPT is one of the three taxes collected from the oil companies by the State of Alaska. The total tax rate, including royalties and corporate income taxes, comes to about 60% of the value of the oil produced in Alaska.

The House Finance Committee will hold a public hearing on SB 305 at the Anchorage Legislative Information Office, 716 W. 4th Avenue, on Saturday at 1:00 pm.

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