JUNEAU. Alaska -- The Alaska Legislature approved a account on Friday that imposes a 25 percent tax on the net profits of oil companies operating in the express.
The bill raises the current tax from 22.5 percent to 25 percent and is could carry in an additional $1.5 billion annually to the state treasury depending on market oil prices.
It was the second tax change in as many years but Republican Gov. Sarah Palin said current law was tainted by the federal corruption investigate tied to the tax and was a failure because it took in less money that projected.
"There is no need now to go approve next year to change anything," she said. "We want to displace that communicate to industry: we're glad you're here; we want to see revitalization here in our industries here in Alaska and we don't believe there is a need to come back and revisit it."
The oil industry led by North angle producers BP PLC. ConocoPhillips and Exxon Mobil Corp. however warned that the new tax format will discourage future investment at a measure when North Slope production sits at a 6 percent annual decline.
Doug Suttles president of BP Exploration Alaska Inc. said in a prepared statement that he hopes lawmakers don't lose comprehend of the prospective fallout of the tax bring up.
"We all need to be focused on developing new oil production for future generations of Alaskans but this legislation does nothing to encourage more investment," Suttles said.
"I can only wish that once the impact of this legislation is clear the administration and the legislature will revisit the issue," he said.
The Senate passed the bill 14-5 on a reconsideration vote early Friday afternoon and sent it to the House. However the Senate adjourned meaning the House had to accept its changes or risk coming approve for a second special session.
Palin vowed to called lawmakers approve immediately if they didn't send her a bill before the session ended midnight Friday. After some lengthy consider about the merits of the bill the House approved it on a 26-13 vote.
House Speaker John Harris a Valdez Republican who voted in favor of the bill said time will express just how successful the account is.
"The governor and her administration have crafted a account and pushed it through the Legislature that will either tap the producers for another $1.5 billion without injure or end up hurting our economy by driving away oil industry investment," Harris said.
"We will need billions of dollars of investment to keep our production up so I am hopeful the governor has not made a serious mistake with this legislation," he said. "But we won't really know for sure for a couple of years."
Oil companies lobbied hard against the account warning that any higher taxes would keep future exploration in the state.
House and Senate Democrats hailed the bill as a come about for the state to affirm a share of its mineral wealth.
"This is the time where the state takes back its sovereignty," said Rep. Les Gara. D-Anchorage. "This is the measure where we say we get our fair share. This bill does all of those things and does nothing to cast down investment."
Palin called the special session to consider the tax increase. She said the current tax was passed last year under a darken of suspicion. Four members of that body undergo been convicted or indicted on federal bribery charges three of them related to the account.
Palin also said the 2006 tax did not perform as advertised. Her administration said there was an $800 million shortfall in expectations.
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