VOLUME 3 | ISSUE 1 | MARCH 2026
LEGISLATURE DRILLS INTO PROPOSED NEW TAXES
Senate Resources Committee proposes rewrite of oil tax code BY TIM BRADNER THE 2026 LEGISLATIVE SESSION GOT OFF TO A BUSY START AND MAY GO DOWN AS ONE OF THE MOST CONSEQUENTIAL IN RECENT YEARS. That will depend on whether any of a se- ries of bills proposed by Gov. Mike Dunleavy passes the Alaska Legislature in Juneau. The legislation is part of a fiscal policy package the governor has put forth that has been anticipated for some time. It’s an ambitious set of bills, combining a set of revenue proposals including two that affect the oil and gas industry along with a broad- based seasonal sales tax, and a new state tax on Internet retail transactions. What may be the most controversial measure put forth is a proposed constitutional amend- ment that makes structural changes in the state’s $85-billion-plus Alaska Permanent Fund but also puts the Permanent Fund Dividend (PFD) into the Alaska Constitu- tion as a guarantee. The oil and gas tax bills drew early criti- cism from the Alaska Oil and Gas Associa- tion, the industry trade association. The in- dustry tax change proposed is an increase in the minimum production tax paid by petro- leum producers from 4% to 6% of gross rev- enue. Legislators are already making changes to the governor’s bills. The Senate Resources Committee has proposed a total rewrite of the state petroleum tax code, which could have major consequences, and the state sales tax is now considered unlikely to pass. The Senate committee’s proposal would shift Alaska’s oil production tax away from a net-profits type tax in place since 2006 and to a tax on gross revenues. This would be consequential because it does not consider field production or capital costs, which are currently are allowed as deductions. Under
Photo by Judy Patrick
Legislators are looking at multiple proposals involving taxes on the oil and gas industries.
The other revenue proposal that will af- fect businesses, including the petroleum in- dustry is the state sales tax advocated by the governor that is on the back burner. Alaska local governments have long had sales taxes but there has never been a state sales tax. While the most direct effects will be on ev- eryday purchases by consumers, businesses will pay the tax on their purchases. The major problem with a state sales tax affects both consumers and businesses. It is that the state sales tax will be added to municipal sales taxes where they exist. For example, Palmer, in the Matanuska-Susit- na Borough, has a 3% sales tax. The state’s summer 4% sales tax would be added to this for a combined tax of 7%. In the winter season, the state rate drops to 2%. The com- bined tax rate would then be 5% in Palmer. Anchorage and Fairbanks currently have no local sales taxes so only the state tax, if it is enacted, would apply. There are other issues, however. Municipalities typically have various exemptions and “caps” on sales taxes, such as a $1,000 cap on the sales value being tax- es. Many of these are unlikely to be allowed in the state tax.
certain circumstances, such as in a lower oil price environment, the tax on gross reve- nue can weigh heavily on the economics of marginal fields and new projects. The other revenue measure directly affecting industry is a plan for a 15-cent- per-barrel fee charged to producers for oil shipped through the Trans Alaska Pipe- line System (TAPS). The governor has said these revenues would be used for mainte- nance of the TAPS corridor, and the state Department of Transportation and Public Facilities (DOTPF) said the money can be used to help maintain the Dalton High- way, the 414-mile gravel road that connects the Interior Alaska highway system to the North Slope. That is a small upside for industry. The Dalton is a state highway with its upkeep funded from the DOTPF’s budget and state general fund revenues. Those are very tight and the state has been struggling to keep the Dalton in reasonable shape for industry activity. That has resulted in wear on trucking equipment, damage to loads and slower speeds for truckers, all of which add to the cost of moving supplies and equipment to the North Slope.
Secretary of the Interior Doug Burgum and Alaska Gov. Mike Dunleavy at the signing of the new public land order.
DOI OPENS 2.1M ACRES IN DALTON CORRIDOR
Resource development opportunities, control of own state touted THE DEPARTMENT OF THE INTERIOR IN LATE FEBRUARY ISSUED PUBLIC LAND ORDER NO. 7966 IN ALASKA’S DALTON UTILITY CORRIDOR, OPENING APPROXIMATELY 2.1 MILLION ACRES OF PUBLIC LAND TO LOCATION AND ENTRY UN- DER THE PUBLIC LAND AND MINING LAWS. This marks a historic step forward in fulfilling the State of Alaska’s land enti- tlement. The order revokes two previous
withdrawals north of the Yukon River — Public Land Orders 5150 and 5180 — ex- panding opportunities for resource devel- opment and enhancing the State’s control over its own destiny. “President Trump was clear — prom- ises made are promises kept and this de- cision is about unlocking opportunity for American Energy Dominance to lower costs for all American families,” said Sec- retary of the Interior Doug Burgum. “By opening these lands, we are empowering Alaska to chart its own course and devel- op energy, minerals and infrastructure that strengthen America’s security and
prosperity.” “Today’s action by Secretary Burgum is a milestone for Alaska’s self-determi- nation. I want to thank President Trump and Secretary Burgum for continuing to deliver on promises, even those promises made decades ago,” said Alaska Gov. Mike Dunleavy. “Alaskans know what’s best for Alaska and revoking these Public Land Orders will empower Alaska to chart our own future on these lands.” The action clears the way for Alaska to advance its remaining land entitlements
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ALASKA RESOURCE REVIEW MARCH 2026
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