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Alaska Governor Proposes Massive Oil Tax Cut Rewarding BP, Exxon & ConocoPhillips

01/17/2013 06:41 pm ET | Updated Mar 19, 2013

JUNEAU -- Alaska Gov. Sean Parnell offered a new attack on the state's current oil tax regime in his State of the State speech Wednesday, saying that one of its key attributes for encouraging new production has been a failure.

Parnell said he wants to reduce "tax progressivity" -- currently, the state tax grows with per-barrel prices and profits -- but he also came out against another key part of the Sarah Palin-era ACES oil tax system, one that reduces taxes for companies investing in Alaska.

Tax credits are a key part of ACES, reducing tax payments to the state when companies invest in new oilfields and other developments in Alaska. They're worth as much as a billion dollars a year and are designed to reduce the cost of doing business in Alaska as well as to encourage new oil development on the North Slope.

Parnell said those credits haven't been working.

"Our laws give tax credits on how much money companies spend in an oil field, not on how much of that spending leads to production," he said.

Legislative testimony last year from state agencies, including the Department of Revenue, said that since ACES was adopted in 2007 there have been numerous new companies exploring for oil in Alaska, though little new oil has yet to reach...