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.