Saturday, January 26, 2008

Taxes Vs. Investment

Conventional wisdom says that when taxes go up investment goes down. Last November the Alaska Legislator passed HB2001 which increased the tax on oil production from 22.5% to 25%.

As of today two of the three major North Slope producers, BP and ConocoPhillips have announced reductions in capital spending. The investment reductions or deferments total over $1 Billion for each.

Those lost investment dollars equal the elimination jobs, goods and services and the taxes collected from those jobs, goods and services.

Higher oil and gas taxes also decrease the economic life span of an oil field.

Something to ponder while as the debate over the Alaska Gas Pipeline rages on.

No comments: