David Caplan of CCH notes that, according to unofficial results of the August 19 primary election in Alaska, a ballot measure to repeal the oil and gas production tax changes made by S.B. 21, Laws 2013, has failed by a narrow margin. The legislation, also known as the More Alaska Production Act, modified the rate structure and revamped credit provisions of the oil and gas production tax. Gov. Sean Parnell signed S.B. 21 into law on May 21, 2013, and key provisions took effect on January 1, 2014. If approved, Ballot Measure No. 1 would have reinstated the previous tax structure, known as Alaska’s Clear and Equitable Share (ACES), passed during the administration of Gov. Sarah Palin.
S.B. 21 increased the base tax rate from 25% to 35% while eliminating the progressivity component of the tax, which applied in months when a producer’s average monthly production tax value exceeded $30. The legislation also provided that qualified oil and gas produced from leases or properties on the North Slope would be eligible for a 20% reduction, called a gross revenue exclusion, in the gross value at the point of production. The gross revenue exclusion is applicable only to certain “new” production. The law provided for an additional 10% gross revenue exclusion for oil and gas produced from certain North Slope units.
Tax credit modifications included the addition of two new per-barrel credits for North Slope producers and elimination of the tax credit for qualified capital expenditures on the North Slope after January 1, 2014. S.B. 21 also provided a corporate income tax credit for qualified oil and gas service-industry expenditures and established an Oil and Gas Competitiveness Review Board in the Department of Revenue. Other provisions of the law lowered the interest rate that applies to overdue taxes from 5% above the applicable federal rate, or 11%, whichever is greater, to 3% above the applicable federal rate.
Ballot Measure No. 1 (Referendum 13SB21), Alaska primary election on August 19, 2014