Section 43.82.210. Contract terms relating to payment in lieu of one or more taxes.

   (a) If the commissioner approves an application and proposed project plan under AS 43.82.140, the commissioner may develop proposed terms for inclusion in a contract under AS 43.82.020 for periodic payment in lieu of one or more of the following taxes that otherwise would be imposed by the state or a municipality on the qualified sponsor or member of a qualified sponsor group as a consequence of participating in an approved qualified project:
        (1) oil and gas production taxes and oil surcharges under AS 43.55;
        (2) oil and gas exploration, production, and pipeline transportation property taxes under AS 43.56;
        (3)   [Repealed, Sec. 6 ch 34 SLA 1999]. 
        (4) Alaska net income tax under AS 43.20;
        (5) municipal sales and use tax under AS 29.45.650 - 29.45.710;
        (6) municipal property tax under AS 29.45.010 - 29.45.250 or 29.45.550 - 29.45.600;
        (7) municipal special assessments under AS 29.46;
        (8) a comparable tax or levy imposed by the state or a municipality after June 18, 1998;
        (9) other state or municipal taxes or categories of taxes identified by the commissioner.
   (b) If the commissioner chooses to develop proposed terms under (a) of this section, the commissioner shall, if practicable and consistent with the long-term fiscal interests of the state, develop the terms in a manner that attempts to balance the following principles:
        (1) the terms should, in conjunction with other factors such as cost reduction of the project, cost overrun risk reduction of the project, increased fiscal certainty, and successful marketing, improve the competitiveness of the approved qualified project in relation to other development efforts aimed at supplying the same market;
        (2) the terms should accommodate the interests of the state, affected municipalities, and the project sponsors under a wide range of economic conditions, potential project structures, and marketing arrangements;
        (3) the state's and affected municipalities' combined share of the economic rent of the approved qualified project under the contract should be relatively progressive; that is, the state's and affected municipalities' combined annual share of the economic rent of the approved qualified project generally should not increase when there are decreases in project profitability, or decrease when there are increases in project profitability;
        (4) the state's and affected municipalities' combined share of the economic rent of the approved qualified project under the contract should be relatively lower in the earlier years than in the later years of the approved qualified project;
        (5) the terms should allow the project sponsors to retain a share of the economic rent of the approved qualified project that is sufficient to compensate the sponsors for risks under a range of economic circumstances;
        (6) the terms should provide the state and affected municipalities with a significant share of the economic rent of the approved qualified project, when discounted to present value, under favorable price and cost conditions;
        (7) the method for calculating the periodic payment in lieu of certain taxes under the contract should be clear and unambiguous; and
        (8) while cost calculations for the approved qualified project under the contract should be based on amounts that closely approximate actual costs, agreed-upon formulas reflecting reasonable economic assumptions should be used if possible to promote administrative certainty and efficiency.
   (c) Except as provided in (b) of this section, the commissioner's discretion under this section in developing proposed terms for a contract under AS 43.82.020 is not limited to consideration of the economic rent of the approved qualified project.

Authorities

43.82.200;43.82.520

Notes

Recent Bills that will modify this

HB 191 OIL AND GAS CORPORATE TAXES

References

AS 43.82.200 Contract development.
AS 43.82.520 Duties of the commissioner of revenue in relation to municipal participation.

History

(Sec. 3 ch 104 SLA 1998; am Sec. 6 ch 34 SLA 1999)