Legislature(1993 - 1994)
04/19/1994 05:40 PM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 498(FIN)
An Act providing for exploration incentive credits for
activities involving locatable and leasable minerals
and coal deposits on certain land in the state; and
providing for an effective date.
Co-chair Pearce directed that CSHB 498 (Fin) be brought on
for discussion and referenced the following amendments:
Amendment No. 1, by Senator Kerttula
Amendment No. 2, by Co-chair Frank
Amendment No. 3, by Senator Kelly
Amendment No. 4, by Senator Kelly
Amendment No. 5, by Senator Kelly
Senator Kerttula noted that Amendment No. 1 contains
language that would "amend into" a subsequent amendment by
Senator Kelly. He then MOVED for adoption of Amendment No.
1. In response to a question from Co-chair Frank, Senator
Kerttula explained that the amendment responds to his belief
that all hire should be local, and the tax credit should not
apply to hire that is not local. No objection having been
raised, Amendment No. 1 was ADOPTED.
Co-chair Frank said that Amendment No. 2 involves technical
amendments to the bill. He then asked that department staff
speak to the change. JERRY GALLAGHER, Director, Division of
Mining, Dept. of Natural Resources, advised of concern that
the granting of tax credits on trust land would create legal
complications. Insertion of "unless otherwise provided by
law" allows the commissioner to withhold tax credits from
such lands. Co-chair Pearce called for objections to
adoption of Amendment No. 2. No objection having been
raised, Amendment No. 2 was ADOPTED.
Senator Kelly explained that Amendment No. 3 removes
retroactive application of the credit to January 1, 1994.
He said that supporters of the legislation have no objection
to removal since the January date was arbitrarily selected.
He then MOVED for adoption of Amendment No. 3. Senator
Kerttula concurred in support. No objection having been
raised, Amendment No. 3 was ADOPTED.
Speaking to Amendment No. 4, Senator Kelly explained that
research into legislation dealing with oil and gas
exploration credits indicates a $5 million limit per site
and a limit of $50 million total. In order to ensure that
limitations are in place, he proposed addition of the
following language:
The amount of an exploration incentive credit
extended under this chapter may not exceed an
amount per parcel or site, as determined by the
commissioner by regulation.
The Senator reiterated need for oversight of totals
associated with these types of credits. Co-chair Pearce
referenced fiscal note information indicating that the
maximum amount of credits that could have been claimed in
1993 totals approximately $17 million.
End: SFC-94, #66, Side 1
Begin: SFC-94, #66, Side 2
Senator Kelly stressed that, in light of ongoing budget
cuts, the legislature must protect existing revenues from
erosion.
Co-chair Frank inquired concerning the types of taxes to
which credits would be applied. Mr. Gallagher said that the
bill applies to three separate payments:
1. Royalty on state land.
2. The mining license tax that applies to all lands--
a form
of severance tax.
3. Corporate income tax.
Senator Kelly explained that the oil and gas lease credit
bill contains the above-mentioned cap to fix a figure in
statute. Rather than try to do that, he said he was
proposing the language within Amendment No. 4.
Co-chair Frank requested that he be allowed a day to review
implications of the proposed amendment. Co-chair Pearce
directed that Amendment No. 4 be held for subsequent
consideration.
Speaking to Amendment No. 5, Senator Kelly noted that the
oil and gas tax credit bill was limited to 50% on state
lands and 25% on lands not owned by the state. The proposed
amendment attempts to duplicate that requirement in CSHB 498
(Fin). He said that he saw no reason for the Alaska public
to subsidize the exploration tax credit on private property.
Senator Kerttula concurred, saying that there should be no
subsidy on non-state-owned properties.
Co-chair Frank requested that Amendment No. 5 also be held
for subsequent discussion.
Senator Kelly referenced language within the amendment
relating to "eligible costs." He explained that the
language was added by the drafter to delineate costs that
are eligible for tax from those that are not. It is
intended to prevent an organization from padding the actual
cost of exploration at the site with overhead and other
types of costs that are not directly related. Amendment No.
1, by Senator Kerttula, relating to labor costs dovetails
with these provisions.
Senator Sharp voiced his understanding that the credit was
limited to labor only. Senator Kelly advised that it covers
other eligible costs.
Co-chair Pearce directed that CSHB 498(Fin) be HELD in
committee for additional review.
| Document Name | Date/Time | Subjects |
|---|