SB 38: "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 before any price adjustments authorized by this Act, to modify the mechanism for calculating the effective tax rate, to provide for adjustments to the tax when the prevailing value of the oil exceeds $20 per barrel or falls below $16 per barrel and to limit the effect of the adjustments, and to exempt certain kinds of oil from application of the adjustments; requiring separate accounting of the proceeds of the tax as amended, and authorizing appropriation of a portion of tax proceeds subject to price adjustment to support state shared revenue programs; and providing for an effective date."
00 SENATE BILL NO. 38 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 before any price adjustments authorized by this Act, to modify the 04 mechanism for calculating the effective tax rate, to provide for adjustments to the tax 05 when the prevailing value of the oil exceeds $20 per barrel or falls below $16 per barrel 06 and to limit the effect of the adjustments, and to exempt certain kinds of oil from 07 application of the adjustments; requiring separate accounting of the proceeds of the tax 08 as amended, and authorizing appropriation of a portion of tax proceeds subject to price 09 adjustment to support state shared revenue programs; and providing for an effective 10 date." 11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12 * Section 1. AS 43.55.011(a) is amended to read:
01 (a) There is levied upon the producer of oil a tax for all oil produced from 02 each lease or property in the state, less any oil the ownership or right to which is 03 exempt from taxation. The tax is equal to either the percentage-of-value amount 04 calculated under (b) of this section or the cents-per-barrel amount calculated under (c) 05 of this section, whichever is greater [, MULTIPLIED BY THE ECONOMIC LIMIT 06 FACTOR DETERMINED FOR THE OIL PRODUCTION OF THE LEASE OR 07 PROPERTY UNDER AS 43.55.013]. If the amounts calculated under (b) and (c) of 08 this section are equal, the amount calculated under (b) of this section shall be treated 09 as if it were the greater for purposes of this section. 10 * Sec. 2. AS 43.55.011(b) is amended to read: 11 (b) The percentage-of-value amount equals the tax rate set out in (e) of this 12 section multiplied by [12.25 PERCENT OF THE GROSS VALUE AT THE POINT 13 OF PRODUCTION OF TAXABLE OIL PRODUCED ON OR BEFORE JUNE 30, 14 1981, FROM THE LEASE OR PROPERTY AND 15 PERCENT OF THE GROSS 15 VALUE AT THE POINT OF PRODUCTION OF TAXABLE OIL PRODUCED 16 FROM THE LEASE OR PROPERTY AFTER JUNE 30, 1981; EXCEPT THAT FOR 17 A LEASE OR PROPERTY COMING INTO COMMERCIAL OIL PRODUCTION 18 AFTER JUNE 30, 1981, THE PERCENTAGE-OF-VALUE AMOUNT EQUALS 19 12.25 PERCENT OF THE GROSS VALUE AT THE POINT OF PRODUCTION OF 20 TAXABLE OIL PRODUCED FROM THE LEASE OR PROPERTY IN THE FIRST 21 FIVE YEARS AFTER THE START OF COMMERCIAL OIL PRODUCTION AND 22 EQUALS 15 PERCENT OF] the gross value at the point of production of taxable oil 23 produced [THEREAFTER] from the lease or property. 24 * Sec. 3. AS 43.55.011(c) is amended to read: 25 (c) The cents-per-barrel amount equals [$0.60 PER BARREL OF TAXABLE 26 OLD CRUDE OIL PRODUCED FROM THE LEASE OR PROPERTY, AND] $0.80 27 per barrel of taxable crude oil [FOR ALL OTHER TAXABLE OIL] produced from 28 the lease or property, [BOTH] as adjusted by AS 43.55.012, multiplied by the 29 economic limit factor determined for the oil production of the lease or property 30 under AS 43.55.013 and by the price adjustment factor set out in (e)(2)(C) of this 31 section.
01 * Sec. 4. AS 43.55.011 is amended by adding new subsections to read: 02 (e) Except as provided in (f) of this section for heavy oil, the tax rate is the 03 lesser of 04 (1) 25 percent; or 05 (2) the product of the volume adjusted tax rate multiplied by the price 06 adjustment factor; for purposes of 07 (A) this paragraph, the volume adjusted tax rate is the greater 08 of 09 (i) five percent; or 10 (ii) the economic limit factor determined for the oil 11 production of the lease or property under AS 43.55.013 multiplied by 12 the nominal tax rate; 13 (B) subparagraph (A) of this paragraph, the nominal tax rate is 14 (i) 12.25 percent during the first five years from the 15 date that is the start of commercial oil production; and 16 (ii) 15 percent after the first five years from the date 17 that is the start of commercial oil production; and 18 (C) this paragraph and for the purpose of determining the cents- 19 per-barrel amount under (c) of this section, the price adjustment factor is one, 20 except that the price adjustment factor is the West Coast prevailing value 21 (i) divided by 16 during each month in which the West 22 Coast prevailing value for oil under AS 43.55.020(f) averages less than 23 $16 per barrel; 24 (ii) divided by 20 during each month in which the West 25 Coast prevailing value for oil under AS 43.55.020(f) averages more 26 than $20 per barrel. 27 (f) Notwithstanding (e) of this section, the tax rate for heavy oil is the volume 28 adjusted tax rate. The volume adjusted tax rate for heavy oil is determined by 29 multiplying the economic limit factor determined for the oil production of the lease or 30 property under AS 43.55.013 by the nominal tax rate set out in (e)(2)(A)(i) and (ii) of 31 this section. In this subsection, "heavy oil" means oil equal to or less than 20 degrees
01 API gravity. 02 (g) The department shall separately account for the amounts collected and 03 penalty and interest accrued on the amounts collected from the tax levied and collected 04 under (e) of this section. From estimated amounts that are deposited and accounted 05 for during the preceding state fiscal year as required by this subsection, the legislature 06 may annually appropriate to the tax equalization account established in AS 29.60.060, 07 the municipal services account established in AS 29.60.170, and the hospital and 08 health facility construction assistance account described in AS 29.60.280(c) one-half 09 of the revenue that is obtained from levy and collection of taxes under this subsection 10 during each month that the price adjustment factor determined under (e)(2)(C)(ii) of 11 this section exceeds one less the revenue that would have been obtained from the tax 12 determined under (e) of this section without the application of a price adjustment 13 factor. 14 * Sec. 5. This Act takes effect July 1, 2005.