Legislature(2009 - 2010)BARNES 124
03/27/2010 10:00 AM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB337 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 337 | TELECONFERENCED | |
HB 337-OIL AND GAS PROD. TAX: CREDITS/INTEREST
[Contains discussion of HB 308]
10:06:31 AM
CO-CHAIR JOHNSON announced that the only order of business is
HOUSE BILL NO. 337 "An Act relating to interest on certain
underpayments or overpayments for the oil and gas production
tax, to certificates for certain oil and gas production tax
credits for qualified capital expenditures, and to alternative
tax credits for expenditures for certain oil and gas development
and exploration activities for the oil and gas production tax;
relating to the use of the oil and gas tax credit fund to
purchase certain tax credit certificates; and providing for an
effective date."
10:07:56 AM
MARCIA DAVIS, Deputy Commissioner, Office of the Commissioner,
Department of Revenue, noted that most of the elements in the
governor's bill, HB 337, have already been discussed and
incorporated into HB 308. A key provision in the governor's
bill would allow the Department of Revenue to waive interest in
those cases where a taxpayer has failed to pay the full amount
of tax because of a retroactive change in regulations.
MS. DAVIS said another key provision of HB 337 is aimed at those
taxpayers allowed to cash in their credits because they produce
50,000 or less barrels per day of oil equivalent. Currently,
for these taxpayers to receive the monetary value of their
credits the credits must be spread over two years and the
taxpayer must demonstrate that it has spent in the following
year the same amount of money it is seeking to get as cash for
the credit. She related that the department has now learned
from experience that there is a hitch in getting cash infusions
into the hands of new entrants. Projects require a large
investment in capital costs to get as far as production.
However, once at production, the extra expenditure of large sums
of money is no longer needed. Because many of the smaller
producers undertake only one project, this results in the
smaller producers being unable to monetize their credits at the
very time necessary to kick off production.
10:09:56 AM
CO-CHAIR JOHNSON asked whether it is dollar for dollar and
whether this is sufficient.
MS. DAVIS responded current law does not require that the same
amount of capital be spent as previously spent; rather, the
taxpayer must spend an amount that equates to the amount of
credit money it is trying to get back. She noted that not all
new entrants have this problem because some have a number of
projects and the timing of projects allows them to work in
phases. However, it does affect how these taxpayers phase the
spending of their money and might sometimes cause them to hold
back on spending so they have money for the following year,
which can affect the efficiency and timing of the projects. She
said the credits have been a success because they are bringing
in new entrants that are staying, but these entrants need this
capital to stay in Alaska and further development by these
companies has been constrained. Additionally, given the current
economy, it has been difficult for these companies to raise
capital for advanced funding.
10:12:00 AM
CO-CHAIR NEUMAN understood it is the Department of Revenue that
determines the taxes owed. He surmised it is also the
department that determines whether additional tax is owed when
regulations are changed retroactively.
MS. DAVIS replied correct.
CO-CHAIR NEUMAN further understood that credits cannot be
received unless the taxpayer spends money and a taxpayer cannot
receive more money back in credits than what it had in
expenditures.
MS. DAVIS answered correct.
10:12:54 AM
CO-CHAIR NEUMAN inquired whether it is the department's opinion
that a taxpayer should be able to use its credits in the first
year. He presumed there is less exploration because of the
downturn in the economy.
MS. DAVIS responded it would absolutely be easier for taxpayers
to use their credits in the first year. Receiving this money
sooner gives a taxpayer more options for its next move as an
investor and developer. Regarding the downturn of the economy,
she said she is referring to the global downturn since that is
basically where equity money flows. She related that the
department has had conversations with new entrants that are not
publicly-traded companies. These companies must go to the
private equity market to generate capital. That capital is
tighter, but that equity market is also hungry because investors
are looking for something beyond the stock market that will
provide a payoff. However, these investors are generally
looking for single projects, not a company to invest in for 20
years, and they therefore want to know what the payout will be
and how soon the return of capital will occur so they can
balance that against the risk. This is different than the large
international corporations that have corporate headquarters that
dole out the money globally.
10:14:58 AM
CO-CHAIR NEUMAN understood the market is flooded with these
transferable credits and offerings to purchase them have been as
low as 50 cents on the dollar.
MS. DAVIS replied correct, the taxpayers that cannot use these
credits against their own bill are stuck and they are forced to
go to the market if they need money faster than the two years
allows. Other taxpayers in this market may already have their
own credits and not need any more; or, other taxpayers may not
be that concerned about it and will buy the credits at a
discount if they can.
10:16:16 AM
REPRESENTATIVE OLSON asked what the form looks like that the
companies must fill out to apply for their credits.
MS. DAVIS answered she has not personally seen the application
form, only the Excel spreadsheet. She deferred to Mr. Dan
Stickel.
DAN E. DICKINSON, CPA, Consultant to the Legislative Budget and
Audit Committee, responded to the question because Mr. Dan
Stickel was not on line, saying he will immediately mail an
electronic copy of the form to the co-chairs.
10:17:50 AM
REPRESENTATIVE SEATON inquired whether there is a way to
prioritize the processing of credits for the small producers,
given Ms. Davis's [3/26/10 statement that when up against the
statute of limitation for audits the department's tax
specialists must process the audits first and the credits
second].
MS. DAVIS replied that HB 337 would not change the status quo
for the statute of limitation, which is currently six years for
those audits being conducted under Alaska's Clear and Equitable
Share (ACES) and the petroleum production profits tax (PPT).
While the Department of Revenue can always use more production
auditors, she said staffing is such that with the six-year
statute of limitation a priority can be put on the credits. The
department has been working to ensure there is not a lag in
getting credits out and the only time this does not happen is
when the statute of limitation is reached for audits.
10:19:13 AM
REPRESENTATIVE SEATON asked whether a section needs to be
included in HB 337 that requires the Department of Revenue to
prioritize the processing of credits for small producers, given
the example provided by Ms. Davis on 3/26/10.
MS. DAVIS answered the situation she described yesterday is
currently a unique circumstance because the department has very
few three-year statute of limitation audits remaining. She said
she was using that as an example of what would happen across the
board if all of the statutes of limitation became three years
[as proposed by HB 308]. She understood that the tax specialist
in the circumstance she described would be through with the
audit this week and able to process the credits early next week.
CO-CHAIR JOHNSON inquired what the problem is with three-year
statutes of limitation if the department is bumping up against
very few of them.
MS. DAVIS responded the department is not bumping up against
them because looking down the pike the statute of limitation is
six years, not three years, and the department is staffed
accordingly. The department has been processing credits knowing
it is not hitting a wall.
10:20:59 AM
MS. DAVIS resumed her overview of HB 337, stating that HB 337
would change the wait for credits from two years to one. She
said the tax credit in the governor's bill is similar to aspects
of HB 308. In the governor's bill the credit is housed under AS
43.55.025, which is the exploration credit that would cover both
operating and capital expenditures associated with exploration.
A development section is being proposed for addition to AS
43.55.025. The credit amplification for infield drilling would
expire July 2016.
10:22:01 AM
CO-CHAIR JOHNSON asked whether infield drilling and/or workovers
would need to be finished by 2016 or begun by 2016.
MS. DAVIS replied it would be the cost incurred; the cost must
be incurred after June [30], 2010, and before July 1, 2016. In
further response, she confirmed the window to receive credits
for infield drilling would be five to six years.
CO-CHAIR JOHNSON stated he will ask representatives of the
industry whether that is enough time to plan, execute, and spend
the money when they come before the committee on 3/29/10. He
further inquired whether the administration is firm on the
sunset date.
MS. DAVIS answered she will discuss this with Commissioner
Galvin and get back to the committee.
CO-CHAIR JOHNSON added that if the provision is working the
state would want to continue it.
MS. DAVIS said this provision is in Section 8 at the top of page
6 under subparagraph (A), which states that it "must be for
exploration or for development well expenditures incurred for
work performed after June 30, 2010, and before July 1, 2016".
10:24:08 AM
MS. DAVIS continued her overview, explaining that HB 337 would
give the Department of Revenue the authority to implement
retroactive regulations that deal with those provisions of the
bill that reach back into the past.
REPRESENTATIVE SEATON requested an explanation of the
retroactive regulations.
MS. DAVIS responded the retroactive regulations would relate to
the provision for waiver of interest and would go back to
February 27, 2007, when ACES became effective. Retroactive
regulations would also apply to the area of capital credit
expenditure and the section that changes net operating losses
and credits from two years to one year.
10:25:57 AM
REPRESENTATIVE SEATON understood the capital credit portion of
that retroactivity would be on the one year versus two-year
application.
MS. DAVIS replied yes.
REPRESENTATIVE SEATON surmised it would not go back and give
capital credits.
MS. DAVIS answered no, the new capital credit, which is the 30
percent increase for infield, would be effective July 1, 2010,
the start of the next fiscal year. In further response, she
said this effective date was chosen for purposes of establishing
no change to what people felt were the fiscal revenues that were
going to flow over fiscal year 2010. As far as regulations, it
is helpful to have the regulations be able to be retroactive
where the law goes back in time.
10:27:37 AM
REPRESENTATIVE SEATON noted that when HB 337 was previously
heard, he requested a written analysis of the fiscal impact.
CO-CHAIR JOHNSON said that has not yet been received. He asked
Ms. Davis whether it could be received by 3/29/10.
MS. DAVIS agreed to do so. She asked whether the request is for
a retrospective view of the governor's bill and what these
credits would have cost in 2008 and 2009.
REPRESENTATIVE SEATON responded correct.
10:28:23 AM
CO-CHAIR NEUMAN recalled that such fiscal comparisons were
looked at for HB 308 [on 3/26/10] and he believes they would be
substantially the same.
MS. DAVIS replied that the information she provided yesterday
was only for the impact of the progressivity; it did not include
the impact of the credits. She agreed that the credit piece for
the bills is shared in common. She explained that the
Department of Revenue is challenged for tracking the credits
because it does not have a tracking system and will have to
manually pull the returns to look at them. Additionally, she
said the department is challenged with ensuring the
confidentiality of Cook Inlet data because there are fewer
taxpayers involved there.
10:29:25 AM
REPRESENTATIVE SEATON clarified he is not asking for in-depth
information, just a thumbnail estimate of the projected fiscal
impact to the state. He said he also requested an analysis of
what the interest provision would do.
MS. DAVIS answered the department does not factor interest into
its revenue projections, so this would have a zero revenue
impact. She explained the department has no way of estimating
who has or has not complied with tax liability. While she could
go back to old years, she said she is unsure that those years
would be indicative of the current or future years.
REPRESENTATIVE SEATON said that if an amount of interest had
been assessed to date, it would indicate the difference between
that assessment and the change in rate.
MS. DAVIS said she will look into whether the department has any
interest assessments and, if so, she will bring that information
to the committee.
REPRESENTATIVE GUTTENBERG commented he does not want to know who
pays what, but he does not feel comfortable being asked to make
a decision on policy when it is shrouded behind confidentiality.
MS. DAVIS said she understood.
10:33:25 AM
CO-CHAIR JOHNSON moved to adopt Conceptual Amendment 1, dated
3/27/2010, suggested by the Department of Revenue, and written
by the department as follows:
Page 1, following line 7
Insert new bill sections to read:
"*Sec. 1. AS.05.15.095(c) is amended to read:
(c) A delinquent fee bears interest at the
rate set by AS 43.05.225(2) [AS 43.05.225].
Sec. 2. AS 34.45.470(a) is amended to read:
(a) A person who fails to pay or deliver
property within the time prescribed by this chapter
may be required to pay to the department interest at
the annual rate calculated under AS 43.05.225(2) [AS
43.05.225] on the property or the value of it from the
date the property should have been paid or delivered.
Sec. 3. AS 43.05.225 (1) is amended to read:
Sec. 43.05.225. Interest. Unless otherwise
provided,
(1) When a tax levied in this title becomes
delinquent, it bears interest in a calendar quarter at
the rate of five percentage points above the annual
rate charged member banks for advances by the 12th 15
Federal Reserve District as of the first day of that
calendar quarter, [OR AT THE ANNUAL RATE OF 11
PERCENT, WHICHEVER IS GREATER,] compounded quarterly
as of the lst day of that quarter;
Sec. 4. AS 43.50.570 is amended to read:
Sec. 43.50.570. Interest. A licensee who
fails to pay an amount due for the purchase of stamps
within the time required
(1) is considered to have failed to pay the
cigarette taxes due under this chapter; and
(2) shall pay interest at the rate
established under AS 43.55.225(1)[AS 43.05.225] from
the date on which the amount became due until the date
of payment.
Sec. 5. AS 43.55.020(g) is amended to read:
(g) Notwithstanding any contrary provision of AS
43.05.225, an unpaid amount of an installment payment
required under (a)(1)-(3) of this section that is not
paid when due bears interest (1) at the rate provided
for an underpayment under 26 U.S.C. 6621 (Internal
Revenue Code), as amended, compounded daily, from the
date the installment payment is due until March 31
following the calendar year of production, and (2) as
provided for a delinquent tax under AS 43.05.225(1)[AS
43.05.225] after that March 31. Interest accrued under
(1) of this subsection that remains unpaid after that
March 31 is treated as an addition to tax that bears
interest under (2) of this subsection. An unpaid
amount of tax due under (a)(4) of this section that is
not paid when due bears interest as provided for a
delinquent tax under AS 43.05.225(1)[AS 43.05.225].
Page 2, lines 5-10:
Delete language and insert the following:
"effective, if
(A) the department determines that the
producer's underpayment resulted because the
regulation was not in effect when the payment was due;
and
(B) the producer demonstrates that it made a
good faith estimate of its tax obligation in light of
the regulations then in effect when the payment was
dues and paid the estimate tax;"
Page 3, line 7:
Delete "AS 43.55.025(f)[AS 43.55.025(f)(2)]"
Insert "AS 43.55.025(f)(2)"
Page 3, line 9-10:
Delete "AS 43.55.025(f) [AS 43.55.025(f)(2)]"
Insert "AS 43.55.025(f)(2)"
Page 4, lines 5-31
Page 5, lines 1-31
Page 6, lines 1-31
Page 7, lines 1-31
Page 8, lines 1-31
Page 9, lines 1-25
Delete all material and insert new sections:
Sec. 9. AS 43.55.023(g) is amended to read:
(g) The issuance of a transferable tax
credit certificate under (d) of this section or the
purchase of a certificate under AS 43.55.028 does not
limit the department's ability to later audit a tax
credit claim to which the certificate relates or to
adjust the claim if the department determines, as a
result of the audit, that the applicant was not
entitled to the amount of the credit for which the
certificate was issued. The tax liability of the
applicant under AS 43.55.011(e) and 43.55.017-
43.55.180 is increased by the amount of the credit
that exceeds that to which the applicant was entitled,
or the applicant's available valid outstanding credits
applicable against the tax levied by AS 43.55.011(e)
are reduced by that amount. If the applicant's tax
liability is increased under this subsection, the
increase bears interest under AS 43.55.225(1) [AS
43.05.225] from the date the transferable tax credit
certificate was issued. For purposes of this
subsection, an applicant that is an explorer is
considered a producer subject to the tax levied by AS
4355.011(e).
Sec. 10. AS 43.55.023 is amended by adding a new
subsection to read:
(m) A producer or explorer may take a tax
credit for a well-related expenditure
incurred after June 30, 2010 and before July 1, 2016,
as follows:
(1) notwithstanding that a well-related
expenditure may be a deductible lease expenditure
under AS 43.55.165 for purposes of calculating the
production tax value of oil and gas under AS
43.55.160(a), unless a credit 1 for that expenditure
is taken under (a) of this section, AS 38.05.180(i),
AS 41.09.010, AS 43.20.043, or AS 43.55.025, a
producer or explorer that incurs a well-related
expenditure may also elect to apply a credit against a
tax levied by AS 43.55.011(e) in the amount of 30
percent of that expenditure;
(2) a producer or explorer may take a
credit for a well-related expenditure incurred in
connection with geological or geophysical exploration
or in connection with an exploration well only if the
producer or explorer
(A) agrees, in writing, to the
applicable provisions of AS 43.55.025(f)(2); and
(B) submits to the Department of
Natural Resources all data that would be required to
be submitted under AS 43.55.025(f)(2) for a credit
under AS 43.55.025;
(3) in this subsection, "well-related
expenditure" means a lease expenditure
(A) directly related to an
exploration well, a stratigraphic test well, a
producing well, or an injection well other than a
disposal well, if the expenditure is a qualified
capital expenditure and an intangible drilling and
development cost under 26 U.S.C. 263(c), as amended,
and 26 C.F.R 1.612-4, regardless of the elections made
under 26 U.S.C. 263(c); in this subparagraph, an
expenditure directly related to a well includes an
expenditure for well drilling, well sidetracking, well
deepening, well testing, well stimulation, well
completion or recompletion, or well workover,
regardless as to whether the well is or has been a
producing well; or
(B) for seismic work conducted
within the boundaries of a production or exploration
unit.
Page 9, following line 26:
Insert new bill sections to read:
Sec. 12. AS 43.77.020(d) is amended to read:
(d) A person subject to the tax under this
chapter shall make quarterly payments of the tax
estimated to be due for the year, as required under
regulations adopted by the department. A taxpayer will
be subject to an estimated tax penalty, determined by
applying the interest rate specified in AS
43.05.225(1) [AS 43.55.225] to the underpayment for
each quarter, unless the taxpayer makes estimated tax
payment in equal installments that total either
(1) at least 90 percent of the
taxpayer's tax liability under this chapter for the
tax year; or
(2) at least 100 percent of the
taxpayer's tax liability under this chapter for the
prior tax year.
Sec. 13. AS 43.90.430 is amended to read:
Sec. 43.90.430. Interest. When a payment due
to the state under this chapter becomes delinquent,
the payment bears interest at the rate applicable to a
delinquent tax under AS 43.05.225(1) [AS 43.05.225].
Page 9, line 29:
Delete both occurrences of "1" and insert "6"
Page 10, line 2-6:
Delete all material.
Page 10, lines 9-10:
Delete all material
Insert the following:
"RETROACTIVITY OF SECS. 6-8 OF THIS ACT. (a)
Section 6 of this Act is retroactive to February 28,
2007.
(b) Section 7 and 8 of this Act are
retroactive to January 1, 2010.
Page 10, line 17:
Delete "1, 2, or 3"
Insert "6, 7, or 8"
Page 10, line 19:
Delete "Sections 4 - 12"
Insert "Sections 1 - 5, and 9 - 13"
Renumber the bill sections accordingly.
REPRESENTATIVE P. WILSON objected to the conceptual amendment
for discussion purposes.
CO-CHAIR JOHNSON said he is moving Conceptual Amendment 1 for
review purposes only and no action will be taken on the
amendment until it has been properly drafted by Legislative
Legal and Research Services.
10:34:09 AM
MS. DAVIS spoke to the amendment, explaining that the work and
discussions on HB 308 made it clear there were some ways to
improve the governor's bill, given that HB 308 includes several
provisions found in HB 337. The amendment would clean up
Sections 1, 2, 3, 4, and 5 from the time when the department's
interest statute, AS 43.05.225, was split into two parts - the
first for delinquent taxes and the second part for blatant
nonpayment of taxes. Other provisions in the department's
purview also referenced AS 43.05.225 when it was just a single
item, so those provisions do not specify which of the two parts
of the current AS 43.05.225 apply. Thus, Section 1 deals with
gaming interest, Section 2 with unclaimed property interest,
Section 3 with the Department of Revenue interest provision,
Section 4 with the tobacco stamp interest, and Section 5 deals
with the ACES monthly installment interest.
10:36:19 AM
MS. DAVIS pointed out that Section 3 is the provision the House
Resources Standing Committee amended [in HB 308] by removing the
11 percent interest rate and changing it to 3 points above the
Federal Reserve rate. The governor's bill did not address the
interest rate, but in retrospect the administration agrees that
11 percent is too steep and in HB 337 is now proposing a rate of
5 percent above the Federal Reserve rate. The administration
believes 3 percent above the Federal Reserve rate is too low to
prevent the state from becoming the banker, given that today's
Federal Reserve rate is 0.75 percent.
CO-CHAIR JOHNSON appreciated the administration's consideration
of this issue.
CO-CHAIR JOHNSON, in response to Representative Guttenberg,
confirmed that the committee should receive the Legislative
Legal and Research Services' version of Conceptual Amendment 1
on 3/29/10.
10:37:52 AM
MS. DAVIS, in response to Co-Chair Neuman, agreed that gaming in
Section 1 relates to the lottery [and not gaming of the state's
tax system]. She further agreed that Section 1 continues to
give the Department of Revenue the authority to determine
whether nonpayment of taxes was done purposely to receive a
financial benefit and Section 3 changes the interest rate on
back tax payments that are due.
10:38:47 AM
MS. DAVIS noted that Section 1 of HB 337 would become Section 6
as a result of Conceptual Amendment 1 and it deals with the
department's right to waive interest where appropriate. Page 2,
lines 18-24, of the amendment proposes new language in response
to the committee's previous debate about whose burden of proof
it is to determine whether a taxpayer did or did not pay the
correct tax amount because of reliance on existing law without
new regulations. Under this language, the determination of
whether interest would be waived would be dependent upon: "(A)
the department determines that the producer's underpayment
resulted because the regulation was not in effect when the
payment was due; and (B) the producer demonstrates that it made
a good faith estimate of its tax obligation in light of the
regulations then in effect when the payment was due...." The
bill's original language would require the department to prove a
lack of good faith, which would be complicated. The amendment's
language makes it clear that the producer must demonstrate its
good faith, which is generally the way most laws are written.
10:40:31 AM
MS. DAVIS explained the suggested changes at the bottom of page
2 and top of page 3 in the amendment are cleanups that came out
of HB 308. Language in HB 308 would require the taxpayer to
share data with the Department of Natural Resources (DNR) when
the state gives a credit for infield drilling and seismic
activities. The reference in HB 308 is to AS 43.55.025(f)(2),
which is much clearer than referencing just AS 43.55.025(f).
Thus, Conceptual Amendment 1 would result in HB 337 picking up
that more precise reference and would make it very clear that
the obligation is to give data after-the-fact and that pre-
approval is not required.
10:41:23 AM
MS. DAVIS said the big change is on page 3 of the amendment.
The governor's bill had the credit for infield drilling
contained in AS 43.55.025, which is the exploration incentive
credit section; HB 308 contained the credit under AS 43.55.023,
which is the capital credit section. After listening to
committee discussion and testimony by Mr. Dan Dickinson, it
became clear that putting this under AS 43.55.023 would provide
a brighter line for identifying what types of costs or expenses
get the credit. Therefore, Conceptual Amendment 1 would change
HB 337 to put the credit for infield drilling under AS
43.55.023. The governor's bill would still maintain some of its
original changes which are focused on the exploration and
development phase; HB 337 does not have a production ongoing
credit for ongoing operations. She said yesterday's discussions
clarified what things would fall under this credit and she
estimates that 95-98 percent of those things would fall under
the exploration and development phase. Accessing new reserves
and enhancing reserve production profiles are important to the
governor, she related.
CO-CHAIR NEUMAN understood Ms. Davis to be saying that credits
under AS 43.55.023 will provide taxpayers with the benefit of
fluid working capital.
MS. DAVIS responded correct.
10:43:46 AM
MS. DAVIS continued discussing the proposed conceptual
amendment, noting that the 4.5 percent overhead would not be
added to the credit, which is different than in HB 308. She
said the administration is very uncomfortable opening that door
because none of the other credits have overhead contained in
them; this helps with the department's administrative work
easier and provides consistency with the other credits. She
clarified that her reference to HB 308 is regarding Amendment 3,
adopted on 3/26/10, and which changed that provision. She
reiterated that there is a sunset provision for part of this
credit.
10:46:01 AM
MS. DAVIS explained that Conceptual Amendment 1 would add new
sections to HB 337 - Section 12 and Section 13. These are
additional interest provisions related to dividing AS 43.05.225
into two parts, as discussed earlier. Section 12 deals with the
fisheries tax and Section 13 deals with the Alaska Gasline
Inducement Act (AGIA) interest. She noted that page 5, lines
20-21, of the amendment would correct the section numbers in the
bill, and page 5, lines 23-24, of the amendment would delete
Section 14 of the bill because it is no longer needed since the
new credit will now be applied under AS 43.55.023 instead of AS
43.55.025. The changes on page 6 of the amendment are the
renumbering of sections in the bill.
10:46:52 AM
REPRESENTATIVE SEATON noted the state has a number of different
interest rates on its different taxes, such as the fisheries
tax. He asked that the analysis of the effective changes in the
interest rate for the production tax that he requested earlier
also look at these other taxes, such as the fisheries tax.
MS. DAVIS agreed to do so.
REPRESENTATIVE SEATON clarified that he is asking only for a
thumbnail look. Regarding fisheries taxes and interest, he
noted the state has appealed a lawsuit, the "Carlson case",
which is based on interest charges. He said he would like to
get an opinion from the attorney general as to whether there is
any interaction with doing this while at the same time appealing
that case.
CO-CHAIR JOHNSON said the bill does not change any fish taxes.
10:49:05 AM
CO-CHAIR NEUMAN cautioned that the Department of Revenue is
being asked to provide a lot of information by 3/29/10.
MS. DAVIS responded the department will do its best to comply.
CO-CHAIR JOHNSON suggested the oil-related information receive
first priority and the fish-related information second priority.
CO-CHAIR NEUMAN said he wants to ensure the focus remains on the
contents of the bill and what the bill affects.
REPRESENTATIVE SEATON clarified his request is specifically on
Conceptual Amendment 1 and the tax provisions contained in the
amendment, and he does not want to move forward without an
understanding of what the effects would be.
10:51:32 AM
MS. DAVIS, in response to Representative P. Wilson, stated that
interest on cigarette taxes due as a result of Internet
purchases would be dropped from 11 percent to 5.75 percent. In
further response, she said that under Conceptual Amendment 1 the
effective date for this drop in interest on cigarette taxes
would be July 1, 2010.
REPRESENTATIVE SEATON noted that if the effective date is
changed for interest on cigarette taxes, the committee will need
to look at those numbers.
10:54:40 AM
MS. DAVIS, in response to Co-Chair Johnson and Representative
Seaton, suggested putting Conceptual Amendment 1 into the form
of a committee substitute for HB 337 because this would make
everything easier to read.
CO-CHAIR JOHNSON agreed.
REPRESENTATIVE SEATON also agreed.
10:55:33 AM
CO-CHAIR NEUMAN commented that he thinks many of the differences
between HB 308 and HB 337 have been put aside and forward
movement is occurring where there is agreement.
CO-CHAIR JOHNSON stated public testimony will be taken on
3/29/10.
CO-CHAIR NEUMAN requested that any members contemplating
amendments talk to other members about their intent should the
paperwork not be available 24 hours in advance.
11:00:22 AM
REPRESENTATIVE SEATON advised he has one amendment already
drafted that would help to make the transferable credits more
saleable through the Alaska Retirement Management (ARM) Board.
He said he also wants to look at the amount of tax credit on the
infield versus exploration tax credits and whether to provide
any different incentive, which would only be a number change.
CO-CHAIR JOHNSON said another way to look at that is guaranteed
flow down the pipeline versus risky flow, with infield credits
having the advantage of being a more guaranteed source of
revenue to the state.
CO-CHAIR NEUMAN agreed with trying to provide an opportunity to
sell credits beyond just the [three] companies that can now buy
them. He said well workovers are keeping the pipeline
throughput from dropping even further. New technology is
keeping the state afloat and the state needs to allow that to
continue. He said he therefore believes that credits for well
workovers are important.
11:03:09 AM
[Members discussed having people available at the next meeting
to answer questions about the possible purchase of transferable
credits by the ARM Board.]
[HB 337 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 337 Amendment 3-27-2010 Final.pdf |
HRES 3/27/2010 10:00:00 AM |
HB 337 |