BP proves tax revisions necessary

In this space last Sunday, we praised the Alaska Senate, in general, and Sen. Tom Wagoner, R-Kenai, in particular, for a broadly supported new proposal to revise the petroleum production tax to prevent oil companies from taking advantage of tax credits to fix pipelines damaged through their own negligence.

Wagoner's Senate Bill 80 drew the immediate support of 15 of his 19 Senate colleagues - Democrats and Republicans, from both the majority and minority caucuses, each of whom signed on as a co-sponsor. It was followed earlier this week by a similar bill introduced in the House by Soldotna Republican Rep. Kurt Olson. Just as Wagoner's bill had in the Senate, Olson's bill drew widespread initial support in the House, where a host of fellow lawmakers from both sides of the aisle - including Valley legislators Mark Neuman and Bill Stoltze - jumped on as co-sponsors.

The issue of tax credits for repairs became a concern last year when faulty pipelines led to a massive oil spill and, later, a shutdown of production after another pipeline leak. Maintenance and repairs of the sort needed to address the corroded lines technically qualifies for credits under the new tax structure.

To prevent industry - BP, in this case - from passing on to the state a portion of the cost of repairs necessitated by the company's own negligence, the two Peninsula legislators filed their bills.

News from the oil patch later in the week proved just how necessary the proposed tax revision is. BP made the following announcement: &#8220BP follows the law when it files its taxes. Accordingly, BP will assume appropriate deductions and credits for the costs associated with the repair and replacement of the Prudhoe Bay Oil Transit Lines.”

While such a posture reveals a corrupt view of what should be a good-faith business partnership between the oil giant and the state, Alaskans should take comfort in the quick action of legislators to attempt to remedy an obviously flawed situation.

We continue to hope that the widespread support already shown these two companion bills in each legislative chamber will translate to a speedy resolution of a potentially costly problem.