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HB 441: "An Act amending the oil and gas properties production (severance) tax as it relates to oil to require payment of a tax of at least five percent of the gross value at the point of production after application of the economic limit factor and before any adjustments authorized by this Act, to provide for adjustments to the tax when the prevailing value of the oil either exceeds or falls below specified limits and to limit the effect of the adjustments, to exempt certain kinds of oil from application of the adjustments, to waive the payment of a portion of the tax on oil when its prevailing value falls below specified limits, and to defer the payment of a portion of the tax on oil when its prevailing value falls below specified limits; and providing for an effective date."

00                             HOUSE BILL NO. 441                                                                          
01 "An Act amending the oil and gas properties production (severance) tax as it relates to                                 
02 oil to require payment of a tax of at least five percent of the gross value at the point of                             
03 production after application of the economic limit factor and before any adjustments                                    
04 authorized by this Act, to provide for adjustments to the tax when the prevailing value                                 
05 of the oil either exceeds or falls below specified limits and to limit the effect of the                                
06 adjustments, to exempt certain kinds of oil from application of the adjustments, to waive                               
07 the payment of a portion of the tax on oil when its prevailing value falls below specified                              
08 limits, and to defer the payment of a portion of the tax on oil when its prevailing value                               
09 falls below specified limits; and providing for an effective date."                                                     
10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
11    * Section 1.  AS 43.55.011(a) is amended to read:                                                                  
12            (a)  There is levied upon the producer of oil a tax for all oil produced from                                
01       each lease or property in the state, less any oil the ownership or right to which is                              
02       exempt from taxation. The tax is equal to either the percentage-of-value amount                                   
03       calculated under (b) of this section or the cents-per-barrel amount calculated under (c)                          
04       of this section, whichever is greater, multiplied by the economic limit factor                                    
05       determined for the oil production of the lease or property under AS 43.55.013 if the                          
06       amount calculated under (b) or (c) of this section when multiplied by the                                     
07       economic limit  factor for the lease or property is not less than five percent of the                         
08       gross value at the point of production.  However, if the amount calculated under                              
09       (b) or (c) of this section, whichever is greater, when multiplied by the economic                             
10       limit  factor for the lease or property is less than five percent of the gross value at                       
11       the point of production, then the tax is five percent of the gross value at the point                         
12       of production.  If the amounts calculated under (b) and (c) of this section are equal,                        
13       the amount calculated under (b) of this section shall be treated as if it were the greater                        
14       for purposes of this section.                                                                                     
15    * Sec. 2.  AS 43.55.011 is amended by adding new subsections to read:                                              
16            (e)  Subject to (f) - (h) of this section, the tax determined under (a) - (c) of this                        
17       section shall be modified during a month in which the West Coast prevailing value for                             
18       oil under AS 43.55.020(f) averages less than $16 per barrel or more than $20 per                                  
19       barrel.  Under this subsection, in lieu of the amount determined under (a) of this                                
20       section, the taxpayer shall calculate and apply an adjustment of the tax.  The                                    
21       adjustment to be calculated and applied is an amount determined by multiplying the                                
22       number determined under (b) or (c) of this section, as appropriate, by the West Coast                             
23       prevailing value divided by                                                                                       
24                 (1)  20 if the averaged reference price exceeds $20 per barrel;                                         
25                 (2)  16 if the averaged reference price is less than $16 per barrel.                                    
26            (f)  An adjustment that is calculated and applied under (e) of this section may                              
27       not be applied to increase the effective tax rate to more than the greater of                                     
28                 (1)  25 percent of the gross value of the oil at the point of production if                             
29       the tax is determined under (b) of this section; or                                                               
30                 (2)  the equivalent of 25 percent of the gross value of the oil at the point                            
31       of production if the tax is determined under (c) of this section.                                                 
01            (g)  During a month in which the West Coast prevailing value for oil                                         
02       determined under AS 43.55.020(f) on which tax is due under this chapter averages less                             
03       than $10 per barrel,                                                                                              
04                 (1)  the payment of one-half of the tax due and payable under this                                      
05       chapter is waived; and                                                                                            
06                 (2)  payment of the remaining one-half of the tax due and payable                                       
07       under this chapter is deferred, subject to the following:                                                         
08                      (A)  the amount of tax payment of which is deferred under this                                     
09            paragraph is payable by the taxpayer                                                                         
10                           (i)  during each month in which the West Coast                                                
11                 prevailing value for oil on which tax is due under this chapter averages                                
12                 at least $16 per barrel; and                                                                            
13                           (ii)  sequentially on a month-for-month basis in the                                          
14                 order in which the tax payment was deferred based on payment of one                                     
15                 month's deferred tax during each month that the West Coast prevailing                                   
16                 value for oil on which tax is due under this chapter averages at least                                  
17                 $16 per barrel; and                                                                                     
18                      (B)  amounts due and payable by reason of a payment deferral                                       
19            under this paragraph bear interest at the rate of a 10-year note of the United                               
20            States treasury at the time of the deferral.                                                                 
21            (h)  On and after July 1, 2005, the commissioner shall                                                       
22                 (1)  annually revise the dollar prices described in (e) and (f) of this                                 
23       section to reflect inflation as defined by regulation adopted by the department; and                              
24                 (2)  promptly report the application of the revisions to all taxpayers                                  
25       subject to the tax levied and collected under this chapter.                                                       
26            (i)  The provisions of (e) - (h) of this section do not apply to heavy oil;  in this                         
27       subsection, "heavy oil" means oil having a weighted average equal to or less than 20                              
28       degrees API gravity.                                                                                              
29    * Sec. 3.  This Act takes effect July 1, 2004.