Saturday, March 31, 2012

Tax Reform: Who needs it?

Oil tax reform: Who needs it anyway? By Andrew Halcro March 30, 2012: On Wednesday over a thousand Alaskans showed up for a lunch time rally for meaningful oil tax reform. As I looked around the room I asked myself; who are these people and who needs oil tax reform anyway? Honestly, who should care that one in three Alaskan jobs are directly or indirectly related to oil industry. Who should care that those attending the luncheon were engineers, oil & gas subcontractor employees, tele-communication employees, retail store owners, union laborers, freight company employees, trucking companies, construction employees, native corporation employees and more small business owners than you could count? Who should care that oil production is declining, state spending is increasing and by 2020 the Department of Revenue predicts that fifty percent of projected oil production will come from investments yet to be made in a fiscal environment that is currently chasing investment away? Who should care that oil revenues fund everything from classrooms, to courts to cops? Who should care that oil funds organizations like the University of Alaska, which has cultivated professors, whose salaries are paid for by oil revenues, who have been opposing oil tax reform in every major newspaper in Alaska? Who should care that one of those professors got his tail handed to him on this very blog after being caught spreading misinformation to make his case against tax reform? Who should care that the latest proposal by another UAF professor is akin to the Lumpy plan; I'll gladly pay you tomorrow for a hamburger today? And while tax reform opponents use the same Lumpy argument about the producers asking for a tax break today in return for investments tomorrow, over the last six years the legislature has a history of raising taxes retroactively and has proven to be a not so trustworthy bunch when it comes to honoring guarantees. In fact, the state has been the equivalent of a hamburger loan shark. But who should care if the opponents of meaningful tax reform who demand guarantees, are the same ones who told the industry the state didn't need to give guarantees when it came to tax certainty on a $40 billion dollar natural gas pipeline? Think about it. The same lawmakers who are demanding certainty from producers over oil production, are the same ones who refused to grant certainty to the producers for building a $40 billion dollar natural gas pipeline. And who should care that opponents of tax reform have no facts on their side and instead are peddling Alaskans half-truths, revisionist history and down right false information? Who cares that they trumpet oil company profits while bitching about gas prices when the two are mutually exclusive? Who should care? Every Alaskan should care. That's why over one thousand men and women whose job security rests on a healthy oil & gas industry showed up at Wednesday's luncheon rally to support meaningful tax reform. The debate over meaningful tax reform has created a gaggle of opponents who have dug in their heels while offering no legitimate alternatives to boosting production under current tax rates. Furthermore the've purposely glossed over the harsh reality that as oil continues to decline and lawmakers begin dipping into savings, the more state government will be looking at Alaskans pockets to start paying for all the state services they've received for the last thirty years free of charge. The arguments against meaningful tax reform have come from a variety of directions including labor unions who have a vested interest in higher government revenues, hoping they'll translate into more government spending and longtime industry critics like radio mouth Bob Lester who has posted a few videos on You Tube taking a sarcastic look at oil tax reform. And while he talks about "our children's future," he doesn't address that our children will be at risk if production continue to decline thus making investments in education, public safety and roads impossible to keep up with growth and rapidly changing socio-economic demographics. Ironically, Lester is the spokesman for Lithia of Anchorage, an automobile dealership. So with thirty percent of the work force existing due to the oil industry, who does Lester think is buying the trucks and automobiles he hawks on television? I'll tell him. Companies like mine who rent and lease to oil companies and sell cars to Alaskans as well, which in turn generate millions in tax revenues for the state and local governments. Companies like construction contractors who survive off work from the oil industry, and employees who get their paychecks directly and indirectly from employment in the petroleum industry. Those are the folks who are entering showrooms and driving away in shiny new vehicles. Meanwhile in Juneau, a number of red herrings have been caught and mounted by legislative oil tax reform opponents. Audits I n a recent Senate Finance Committee, lawmakers got all twisted up about the fact that the state was behind in their audits. State Senator Bert Stedman (R-Sitka) chastised the Parnell administration for failing to keep current on oil industry audits. Whoa there should look in the mirror first. On October 6, 2007, during the testimony on ACES, Marcia Davis the former Deputy Commissioner of Revenue under Palin, was asked about the states ability to keep audits current. "We have great auditors, but we just don't have enough of them," Davis told lawmakers. Less than two weeks later, International Oil & Gas expert Pedro Van Meurs was testifying in front of the senate and was asked why the legislature shouldn't raise oil taxes for the second time in two years. Van Meurs responded "You haven't even done you first audit under PPT, so you don't have enough information." Even after these clear warnings that the Palin administration and lawmakers ignored, they went on to pass a tax regime that has confused just about every oil company that does business in Alaska. In Palin's fy08 budget not one dime was requested for auditors, nor did the legislature approve an additional funds after hearing twice during the ACES debate that there were simply not enough auditors. In 2008 after a presentation that highlighted the lack of efficiency in the state's auditing division, Palin requested $24 million for more technology and people, but the senate zeroed out their request. But today, lawmakers like Stedman, who ignored the warnings and then vetoed the request for better analytical tools and more auditors, are hot under the collar that the administration is behind on their audits? Please. After all it's just Alaska's economy we're talking about. Oh and the .92 out of every dollar the oil & gas industry contributes to state employee salaries and retirement benefits, along with a few hundred million that benefit the same professors who oppose oil tax reform. But really, who needs oil tax reform anyway? Alaskans who understand the economy,that's who. Read More :

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