INCREASE TAXES ON THE OIL INDUSTRY? NO!

Rep. Vic Kohring
Wasilla, AK
Mar. 2, 2004

Some members of the Legislature are working hard to increase taxes on our Alaska oil industry to solve our fiscal crisis. Juneau has been drenched in money provided by the oil companies hard work on the North Slope for 30 years and now wants to “reward” the industry by taxing them to make up for its own ill-advised spending and unwillingness to live within its means.

Some in Juneau want even more money instead of balancing the state’s budget, as everyday Alaskans must do with their own personal budgets. We have had so much easy money for so long that we’re hooked on it like a drug. Instead of admitting to our errors and voting to make government smaller and more efficient, we want to kill the goose that lays the golden egg, the oil industry.

Why would we want to penalize the very men and women who have given us Modern Alaska? Perhaps we’ve forgotten the enormous impact the oil industry has had on us? Before the days of Big Oil, our state got along on much less money, for example, $99 million in 1967. Since oil began flowing, the budget increased over 3000-fold! Oil money paid for new, exorbitantly expensive schools with large swimming pools, for performing arts centers and sports arenas, for a million and one programs that are now acting as weights drowning us in red ink.

A farsighted few predicted Juneau would be highly likely to blow easy money. So they created the Permanent Fund to funnel some oil money directly to the people as individuals. Now Juneau wants that too! But if Big Oil is taxed even more, the industry will be less inclined to continue producing or may even leave Alaska to find a more receptive climate for their talents and efforts.

Instead of taxing oil to an even greater degree, we should grant the industry tax credits and exemptions so it has a real economic stimulus to look for new oil and create even more wealth. If we don’t do this, companies may take their awesomely productive efforts to Siberia or Kuwait where they are more appreciated. Not only should we encourage additional exploration and production through low taxes, we should streamline the unreasonable paperwork and red tape demands. The Governor has taken lead on this, so I commend him. But more needs to be done. With an operating budget of over seven billion dollars a year (oil and federal dollars) and a legion of government workers, we have a target rich environment in which to choose areas to cut.

There are other reasons for not increasing taxes on our golden benefactors up north. One, is the regressive spending spiral would likely continue. If we do not reduce spending by eliminating useless and unconstitutional government programs, and we instead hike taxes on oil companies, if we make this mistake, Juneau will continue with wasteful spending for its special interests. In other words, it will be “business as usual” until next session when there is not enough to go around, once again. Following that, Juneau will likely turn on Alaskans with sales and income taxes.

I recommend we stand strong, vote unnecessary items out of existence and finance the fundamentals: schools, roads, police and justice. Most of the rest is not needed made possible only because we’ve had so much money given to us by Big Oil.