Alaska should vote no on Measure 1 – Fairbanks Daily News-Miner: Community Perspectives   Leave a comment

Alaska should vote no on Measure 1 – Fairbanks Daily News-Miner: Community Perspectives.

I go back and forth on this issue, which is why I am running this Community Perspective and the following letter to the editor that takes it apart.

I’m of two minds. As a fiscal conservative, I think that low taxes are a good idea, especially on businesses. However, Alaska is not a normal state because our state government owns the mineral rights under everybody’s property. The only way Alaskans get any benefit from OUR resources are through the sale of royalty oil (and gas, if we ever get any out of the ground) and taxes. If I find oil under my land, it belongs to the State and the State leases it the producers and without taxation it would pass out of the state without an “owner” deriving a benefit.

Think of the State of Alaska as Farmer Joe Smith in North Dakota or Texas, not as the State of Alaska. In many ways, it is a business entity. It’s very socialist, I don’t think it’s a good idea, but it’s what the federal government required of us to become a state and … there you have it.

So after decades of the oil companies getting the LOWEST TAXES IN THE WORLD, we finally got around to restructuring the tax system to what was known as ACES. ACES was a fair taxation system that lacked a key element — tax breaks for exploration and development of new fields. ACES was on par with other states for taxes and in line with what it costs producers in OPEC countries. Alaska raked in some good revenue for a few years, thanks to ACES. The oil companies punished us by slowing down production. In typical Alaska wimp tradition, our Legislature decided to scrap ACES and return to lower tax structure. We’re back to selling our resources for far less than they’re worth. I opposed that because the math said we’d quickly be in revenue freefall and like it or not, we own the oil collectively and we have a right to get paid for OUR resource.

But ….

The oil companies are showing some signs of developing new fields and new fields will mean more oil in the pipeline, more jobs for Alaskans, and more royalty oil for the State of Alaska corporation to sell.

And, uncertainty is the quickest way to drive away investment. Alaska is already nervous-making for capitalists because we are a socialist structure (like it or not), so the last thing we need to do is start acting in a capricious manner. Let’s hold the course for 3-5 years and see where it takes us. If it doesn’t work as Mr. Wein suggests it will, reinstate ACES with the addition of inducements to explore. I personally would like to see inducements that favor smaller, Alaskan-based companies, but that’s another topic.

So, as of today (I might feel differently tomorrow), I’m voting “no” on Proposition 1. Please read the article for a full discussion of the issues. I don’t wholly agree with Mr. Wein (no surprise there if you’re a regular reader), but his arguments are sound.

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