Jon Iversen: The Battle Over the Alaska Oil and Gas Production Tax Credit

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Stoel Rives tax partner Jonathan Iversen authored an article for State Tax Notes titled “Alaska’s Tax Credit Showdown.” The article, the second Iversen has contributed as a columnist for State Tax Notes, further delves into Alaska’s oil and gas production tax — subject to continuing debate and change as lawmakers and policymakers struggle with balancing budgets in times of volatile oil prices while also encouraging the investment necessary to monetize the state’s resources to run its government, create jobs, build and maintain infrastructure, and promote economic activity.

In the article, Iversen provides:

  • A review of the oil and gas production tax and how it has evolved into several different structures in response to the locations of resources, population centers and developed infrastructure within the state. 
  • An overview of how tax credits have evolved since 2005 — when the primary credit was meant to encourage exploration for oil and gas — as the Alaska Legislature revised the production tax and enacted new credits over the years designed to spur exploration and development activity, attract new entrants to the state, and increase production in existing fields.
  • A look at how — even as the production tax credit structure has proved to be an effective incentive for oil and gas exploration, development and production — lawmakers and policymakers, faced with low oil prices, rising budget deficits and the price tag that came with rebatable tax credits, have targeted some of the credits for reduction or elimination.

In his next column, Iversen will look at “payment of the outstanding production tax credits, including the secondary market for the credits, and legislation introduced by the governor to issue bonds to pay for the credits — at a discount.”

Iversen concludes, “We have several months left of legislative session, and 2018 is an election year. The uncertainty continues for Alaska’s oil and gas industry.”

Read “Alaska’s Tax Credit Showdown” (PDF), published April 2, 2018.

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