ACES is broken. It’s costing Alaskans jobs and business. It’s costing Alaska oil industry investment. Its only beneficiary has been state government, which has continued to expand since ACES was adopted, but in the long term, it also will cost state government revenues by hastening the rate of production decline.
House Bill 308 represents a significant step toward fixing ACES by addressing its most harmful component: the progressivity feature that results in government taking 70% of the profits at current oil prices and more than 90% at higher prices, and distorts the balance between investment risk and reward.
My company is one of the first casualties of the ACES oil tax. That’s why I agreed to participate in "Faces of ACES," a communications campaign sponsored by the Alaska Support Industry Alliance.
ACES is broken. It's time to fix it.
Alaska's Clear & Equitable Share, or "ACES," is the oil and gas production tax law enacted in late 2007 and imposed retroactively. However, it is neither clear nor equitable, and state government's "share" has come at the expense of private sector growth - jobs and business opportunities for Alaskans.
It has created uncertainty for taxpayers, a nonsensical tax system that penalizes production from large fields and an unfriendly investment climate.
ACES was the third and largest production tax increase in a 3-year period - a multibillion-dollar tax hike that gives Alaska the dubious distinction of being the state with the highest taxes on the energy industry and was described by Bradner's Legislative Digest as "staggering."
It increased production taxes by 50% from 2007 and 350% from 2006 based on an $80/barrel market price, and includes an aggressive "progressivity" formula that boosts the tax rate as oil prices increase.
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