HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS PETROLEUM NEWS BAKKEN MINING NEWS

Providing coverage of Alaska and northern Canada's oil and gas industry
April 2006

Vol. 11, No. 17 Week of April 23, 2006

Tax increases the wrong approach

Rep. Vic Kohring

The author Vic Kohring is a Republican member of the House of Representatives in the Alaska State Legislature. He represents the Wasilla and the Mat-Su areas of Southcentral Alaska.

Chief Justice John Marshall (1755-1835) said, “The power to tax is the power to destroy.”

Once again our state government, led by a pro-tax ideology, is willing to jeopardize killing the goose that provides Alaska with its golden eggs. The proposed tax is being referred to as “bold” and “fair,” but in the analysis of sound reason, it’s merely an attempt to take from Alaska’s most productive industry to continue fueling the state’s enormous bureaucracy.

Those who would take even more money from the oil and gas industry are failing to recognize the long-term ramifications of their actions. It’s a straight out claim to take billions from those who earned it and pour those same billions into more government. Instead of calling it what it is, this aggressive tax is being referred to as “restructuring.”

What events set this off? The world has a relatively stable supply of oil, but the economies of Russia and China opened up after the fall of Communism and the resulting, glutinous demand caused prices to rise. Thus, companies in the oil and gas business who have invested and risked billions to find, transport and refine petroleum products are now experiencing a temporary profit bonanza. If the market is allowed to respond without major disruption by government, such as a record tax increase, large profits will attract new investment, with increased competition resulting in lower prices at the pump.

In the meantime, many with little consideration of the free market process, are demanding that Alaska get its “fair share” because of current high prices. As if the state’s treasury has not already done so. It fact, the state has gobbled up about $80 billion of wealth that oil companies created for them since 1977. It’s almost as if government, not content with the huge sums flowing into Juneau, is envious and wishes to punish those making big profits from their risk, investment and hard work.

Don’t believe the hysteria coming from most liberal, pro-big government media. I’m convinced the majority of Alaskans do not want oil companies to be controlled in such a way that they are being strong-armed by the state. In fact, a careful, educated opinion is prevalent that demands we in Juneau instead hold the line, spend less on government and encourage all business to do as well as the oil and gas industry. My public opinion messages and e-mail side with reason and reflect this thinking.

If calmer voices are ignored and government sacks the industry even more, we will all ultimately pay for it. While a certain group of favored recipients of government welfare, both social and corporate will benefit, the rest of us will have to pay more for what we buy and use. If the Legislature increases or “restructures” oil industry taxes, the message sent around the world will be that Alaska is not a politically stable place to do business. If that’s the case, can you blame the industry for getting cold feet about building a $20 billion gas pipeline or exploring for more oil?

Let’s take the opposite approach. Let’s applaud the oil industry’s success and put the word out that Alaska is pro-business and pro-development, and that we will not increase taxes or subject company planners to cumbersome, complicated restrictions and controls. That will encourage all the good things — more exploration, more extraction, lower prices, and, if the market remains stable and growing, a privately owned, built and run gas pipeline that will create good paying jobs for many Alaskans.

It’s imperative Juneau learns how to encourage private business to prosper while holding a firm grip on excessive spending instead of giving in to a wide array of special interests demanding money. Substantially raising taxes on any part of the economy is a mistake, with the exact opposite consequences than anticipated. The smoldering hulks of state government attempts to play businessman are all over Alaska, from the mega loss of the Delta Barley Project to the belly flops of the meat processing plant in the Valley and the grain terminals in Seward which lost the state millions, or the fish plant debacle in Anchorage.

My fellow Alaskans, please don’t allow Juneau to increase taxes. It would be the same as the famous words of P.J. O’Rourke…“Giving money and power to government is like giving whiskey and car keys to teenage boys.”

We can do better.






Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] --- http://www.petroleumnews.com ---
S U B S C R I B E

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©2013 All rights reserved. The content of this article and web site may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.