JUNEAU, Alaska -- The Alaska Legislature approved a bill on Friday that imposes a 25 percent tax on the net profits of oil companies operating in the state.

The bill raises the current tax from 22.5 percent to 25 percent, and is could bring in an additional $1.5 billion annually to the state treasury depending on market oil prices.

It was the second tax change in as many years, but Republican Gov. Sarah Palin said current law was tainted by the federal corruption probe tied to the tax and was a failure because it took in less money that projected.

"There is no need now to come back next year to change anything," she said. "We want to send that message to industry: we're glad you're here; we want to see revitalization here in our industries here in Alaska and we don't believe there is a need to come back and revisit it."

The oil industry, led by North Slope producers BP PLC, ConocoPhillips and Exxon Mobil Corp., however warned that the new tax format will discourage future investment at a time when North Slope production sits at a 6 percent annual decline.

Doug Suttles, president of BP Exploration Alaska Inc., said in a prepared statement that he hopes lawmakers don't lose sight of the prospective fallout of the tax hike.

"We all need to be focused on developing new oil production for future generations of Alaskans, but this legislation does nothing to encourage more investment," Suttles said.

"I can only hope that once the impact of this legislation is clear, the administration and the legislature will revisit the issue," he said.

The Senate passed the bill 14-5 on a reconsideration vote early Friday afternoon, and sent it to the House. However, the Senate adjourned, meaning the House had to accept its changes or risk coming back for a second special session.

Palin vowed to called lawmakers back immediately if they didn't send her a bill before the session ended midnight Friday. After some lengthy debate about the merits of the bill, the House approved it on a 26-13 vote.

House Speaker John Harris, a Valdez Republican who voted in favor of the bill, said time will tell just how successful the bill is.

"The governor and her administration have crafted a bill and pushed it through the Legislature that will either tap the producers for another $1.5 billion without harm, or end up hurting our economy by driving away oil industry investment," Harris said.

"We will need billions of dollars of investment to keep our production up, so I am hopeful the governor has not made a serious mistake with this legislation," he said. "But we won't really know for sure for a couple of years."

Oil companies lobbied hard against the bill, warning that any higher taxes would hinder future exploration in the state.

House and Senate Democrats hailed the bill as a chance for the state to claim a share of its mineral wealth.

"This is the time where the state takes back its sovereignty," said Rep. Les Gara, D-Anchorage. "This is the time where we say we get our fair share. This bill does all of those things, and does nothing to chill investment."

Palin called the special session to consider the tax increase. She said the current tax was passed last year under a cloud of suspicion. Four members of that body have been convicted or indicted on federal bribery charges, three of them related to the bill.

Palin also said the 2006 tax did not perform as advertised. Her administration said there was an $800 million shortfall in expectations.