An Act repealing the oil production tax and gas production tax and providing for a production tax on the net value of oil and gas; relating to the relationship of the production tax to other taxes; relating to the dates tax payments and surcharges are due under AS 43.55; relating to interest on overpayments under AS 43.55; relating to the treatment of oil and gas production tax in a producer's settlement with the royalty owner; relating to flared gas, and to oil and gas used in the operation of a lease or property, under AS 43.55; relating to the prevailing value of oil or gas under AS 43.55; providing for tax credits against the tax due under AS 43.55 for certain expenditures, losses, and surcharges; relating to statements or other information required to be filed with or furnished to the Department of Revenue, and relating to the penalty for failure to file certain reports, under AS 43.55; relating to the powers of the Department of Revenue, and to the disclosure of certain information required to be furnished to the Department of Revenue, under AS 43.55; relating to criminal penalties for violating conditions governing access to and use of confidential information relating to the oil and gas production tax; relating to the deposit of money collected by the Department of Revenue under AS 43.55; relating to the calculation of the gross value at the point of production of oil or gas; relating to the determination of the net value of taxable oil and gas for purposes of a production tax on the net value of oil and gas; relating to the definitions of 'gas,' 'oil,' and certain other terms for purposes of AS 43.55; making conforming amendments; and providing for an effective date.
03-17-06 : Passed House Resources Committee with a committee substitute, to be moved to House Finance Committee. The committee substitute creates a profits-based tax structure, while providing the industry with credits and other incentives for renewed exploration activity statewide. It also removed gas from the progressivity portion of the bill.
HB 488 eliminates the economic limit factor (ELF) and replaces it with a petroleum production tax (PPT). It levies a 20 percent tax on an oil field's net cash flow and provides a 20 percent tax credit for all upstream capital investment that increases oil production. A tax credit is also allowed for any losses. The production tax takes effect July 1, 2006.