Oil tax reform: Creating opportunity for Alaskans
Should oil tax policy be about more money for government spending or about more economic opportunity for Alaskans?
Legislators in Juneau who support higher taxes are the same ones arguing to protect government take for more government spending. However, most Alaskans know you cannot tax your way to prosperity, nor can you spend your way there.
Historically, low taxes have fostered economic expansion. President Kennedy’s commitment to lower tax rates triggered economic growth throughout America. President Ronald Reagan did the same in the 1980s when he lowered taxes. He tamed the tiger of inflation and established the foundation for the greatest economic expansion in decades.
The United Kingdom recently lowered taxes, reducing its government take on North Sea oil. The result has been a dramatic increase in investment and new jobs. In fact, from 2012-2013, investment in the United Kingdom has grown by billions of dollars due to a more competitive tax structure.
Closer to home, we have seen the effect a competitive tax system has had in Cook Inlet, where low taxes and incentives have attracted new companies and new investment. The flurry of activity is already delivering needed energy to Alaskans, a boost to the local economy. This will pay dividends well into the future for Alaskans.
In the global market, especially during a worldwide oil boom, a state’s level of investment is directly connected to the attractiveness of its tax regime.
Unfortunately, some legislators just want to protect the government and grow its size. Rather than concentrating on economic growth and creating private sector opportunities, they are fixated on how much government will have to “give up” with oil tax reform. They speak about how much it will “cost” government coffers in foregone tax revenue. Nowhere do they advocate for private sector economic growth for Alaskans.
They just want to tax more to spend more. It sounds like an addiction.
To borrow an old metaphor, tax policy should not be about seeing how many feathers government can pluck from the goose without too much squawking. Instead, tax policy must be about growing the economic pie for all Alaskans.
What Alaskans need is not an ever-expanding government, but more economic opportunity. So how do we get it? Through new oil production.
If we want more production and investment in Alaska, we need to become more competitive. Much like when an Alaskan looks for a bank or credit union that will provide the highest interest on deposits, Alaska must be a better state to invest in than the next place companies can take their capital.
With so many growing oil and gas fields being developed across North America, the time is now to reform our tax structure so we stop the draining away of oil exploration and production investments.
Ask yourself, why shouldn’t Alaskans be profiting from new company investment dollars and new production?
Alaskans should have job opportunities from new oil, not just North Dakotans. Alaskans should have more small business start-ups and production growth, not just Texans. Alaska has a world-class resource base and should be creating the maximum number of new opportunities with it.
The next time you hear a legislator talk about how much oil tax reform will “cost” the state, ask them why they would rather protect big government at the expense of every Alaskan’s opportunity.
Parnell is the 10th governor of Alaska. He was elected to his first full term in 2010.