Low oil prices prompt call for Alaska income tax

The plan, paired with a price anger proposal, is geared towards closing a $three.5-billion-dollar deficit the state is carrying.

Right now, Alaska is the only state that does not have a state sales tax or personal income tax.

Oil revenue dropped to 75 percent of the state’s treasury in fiscal 2015 from 88 percent the year before, according to the Revenue Department.

State Sen. Pete Kelly (R), who co-chairs of the state Senate’s Finance Committee, responded to the governor’s plan in a statement that said, “I wish I had some pithy comment to express my disdain for taxes, but I don’t”. Crude oil prices have been hovering at seven-year lows, and earlier this week, they dipped to $37 a barrel. Gross production taxes on oil and natural gas were off 54.4 percent last month when compared to November 2014. Walker is proposing about $100 million in new cuts and $360 million in new taxes.

The state is heavily dependent on oil revenue.

He warned, however, that investment in production is due to drop for a second consecutive year for the first time in 30 years. But she says the plan he released Wednesday, which includes an income tax and a reduced annual dividend check, isn’t equitable. The Republican-turned-independent governor also recommended some oil tax and credit changes.

Kara Moriarty, president and CEO of the Alaska Oil and Gas Association, said the prospect of the industry paying more in taxes when oil prices are at their lowest point in years won’t improve Alaska’s chances of bringing new projects online and adding oil to the pipeline.

The centerpiece of Walker’s plan is using the fund that provides annual checks to most Alaskans to generate a stream of cash for state government rather than relying on the year-to-year volatility of oil. Most of that money, more than $50 billion, is set aside in a special account called the Permanent Fund that can’t be touched under the state Constitution. That payment was made to 645,000 people and was the largest ever.

While permanent fund earnings can be used for the state budget, legislators have been loath to go there for fear of being accused of “raiding” the fund.