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                                                                        February 16, 2006

Dear Friend:

This week Representative Les Gara and I have introduced legislation that will re-vamp Alaska's oil tax system. With barrel prices continuing to rise, I believe that Alaskans deserve a fair share of the oil companies record-breaking profits.

Below is a release from my office on the bill that includes quotes from some of my colleagues in the State House and Senate.

JUNEAU - Describing it as an effort to open a critical and time-sensitive debate, Legislative Democrats introduced legislation today to increase oil revenues for Alaskans.

"Democrats called for oil tax reform two years and $3 billion ago," said Rep. Les Gara (D-Anchorage).

"A lot of people have been talking about a change to the oil tax regime," said Sen. Johnny Ellis (D-Anchorage), "but Democrats believe it's time to stop talking and start leading. There's been a leadership vacuum in Juneau, and Democrats are stepping up to the task."

While the legislation can't be rushed through the process, many Democratic Legislators agree it can't be delayed any longer, either.

"This is some of the most important legislation we've looked at in a long time," said Rep. Ethan Berkowitz (D-Anchorage). "When it comes to fulfilling a Constitutional responsibility the approach has to be, no excuses, no delay and no give-away."

The legislation requires a profit sharing production tax that has been suggested recently as a way for Alaskans to get their fair share from the state's oil. Democrats see the introduction of the bill as only the beginning of the process. Democratic Legislators plan to use public input to help refine the legislation to meet several goals.

Among those goals is ensuring the state, and Alaskans, receive the maximum economic benefit from Alaska's oil resources. Other goals include encouraging a broad range of oil and gas exploration and production; encourage independent oil and gas companies to do business in Alaska; enhance international competitiveness; ensure efficient and effective administration of the tax system and provide energy for Alaskans.

Details in the proposed tax structure bill:

• The bill taxes the net profits of oil producers at 30%.
• Companies can receive tax credits for up to half their tax burden for new exploration-type investments.
• The first 1000 barrels of oil per day per field are exempt.
• The ELF and severance tax systems are entirely replaced.
• This bill does not affect tax structures for natural gas production.
• At $60 (current price) per barrel, it raises at least $2.5 billion more than the existing system.