Oil Tax Changes Require More Careful Consideration

By Nicholas Begich III

This op-ed originally appeared in the Anchorage Daily News on January 18, 2020.

On Friday, a group submitted an application to once again change the rules when it comes to Alaska’s tax structure. This is yet another attempt to write legislation by ballot measure. Those who lent their signature to the cause have our state’s best interest in mind. After all, couldn’t the political acrimony of the previous year be solved with a simple tax change? Proponents have told us that we can have a full Permanent Fund dividend and all the services we want if we simply “sign here.” Like most things in life, things that sound too good to be true usually are.

Public policy requires research, dynamic modeling, and debate whereas this measure was written by a small group out of public view. No public process was followed nor any modeling performed to show the initiative’s likely economic impact. Unfortunately, this two-page initiative is half-baked, having been constructed out of the public eye and away from the transparency of our tax policy process.

We all know Alaska remains at a crossroads. Our economy continues to rebound from the recession, and for the third year in a row, our population declined. However, Alaskans have real reason to be optimistic about a meaningful turnaround in the oil patch. Companies that have never considered development in Alaska are now making large investments. Legacy companies are also spending billions on innovative new projects that will put more oil into the pipeline. With these investments, Alaska will benefit for years to come: jobs, revenue and increased oil production. Companies make investments of this magnitude only after a great deal of study. Exploratory data, financial forecasts, investor sentiment, regulatory burden, comparative opportunities and tax structures must all come together for what are multi-billion dollar go/no-go decisions. For Alaska, several of these multi-decade, large-scale investments are on the precipice of approval.

Like so many other Alaskans, I’m a business owner; and as a business owner, I know tax rates are a major factor in determining the extent to which we can invest in the growth of our services, our facilities, and our team. Oil tax proponents want us to believe that a 300% tax increase on the industry will have no impact on current and new investments. A claim like that is simply false.

As Alaskans, we expect and seek out the straight facts. The coming debate on this issue will provide an opportunity to receive more complete and accurate information. Oil tax policy is a complex matter, and to do it right, we need input from all sides: state experts, industry, economists, elected officials and members of the public.


Nicholas Begich III is the CEO and founder of FarShore Partners, a global software development company. He is also the Co-founder of Dashfire, a firm that has assisted in creating, advising, and launching nearly 50 technology-supported businesses across the U.S. He serves as Board President for the MTA Foundation and Alaska Policy Forum. He holds a BBA in Entrepreneurship from Baylor University and an MBA with concentrations in Decision Modeling and Information Technology from Indiana University Bloomington.

Photo by Arthur T. LaBar, CC BY-NC 2.0.