(Adds polls closing)
By Steve Quinn
JUNEAU Aug 19 (Reuters) - Voting ended on Tuesday evening in an Alaska primary election that in part will decide whether to repeal or uphold a new law that cuts taxes on oil production and is worth up to $1 billion a year to companies such as Conoco Phillips, BP Plc and Exxon Mobil Corp.
If voters repeal the eight-month-old tax reduction ushered in by Governor Sean Parnell, the state would go back to the system implemented by Parnell's old boss Sarah Palin, who raised taxes in 2007.
Parnell says his tax rollback will make Alaska more competitive for investment and North Slope oil producers. He calls the More Alaska Production Act crucial to the state's long-term future because it would reverse declining output.
Opponents say Parnell's system only puts more money in the oil companies' pockets while depleting the state's fiscal war chest.
The opponents call it a "giveaway," saying high oil prices could push an extra $1 billion to oil companies and they question whether oil output can be lifted over the long term.
A repeal would put Palin's old system in place and send the Legislature back to the drawing board next session.
Parnell says his system has already slowed drops in output.
"The word (giveaway) troubles me because it is built on a short-term vision, rather than long-term gain for our children and grandchildren," Parnell, a Republican seeking a second full term this year, told Reuters.
"We've already demonstrated in the first year that it's working," he said.
Repeal backers got on the ballot last year with a petition featuring 50,000 signatures shortly after Parnell signed Senate Bill 21. They face opposition that has raised close to $15 million compared with their several hundred thousand dollars that trickled in.
They believe Parnell's law simply enables companies to harvest profits in Alaska and invest them elsewhere.
"Just giving away money and hoping companies don't take it out of state, it's not smart policy," said State House Rep. Les Gara, an Anchorage Democrat. "Parnell says 'here is a gob of money and you can spend it anywhere you want. We just hope you spend it here.'" (Editing by Terry Wade, Gunna Dickson and Tom Hogue)