Canadian fossil-fuel industry gets $2.74B handout: report

mentalfloss

mentalfloss

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Canadian fossil-fuel industry gets $2.74B handout: report

Canada subsidizes its fossil-fuel industry despite a G20 pledge not to.

Canada still subsidizes its fossil-fuel industry to the tune of $2.74 billion (U.S.) annually, despite a G20 pledge made in 2009 to completely phase out such support.

About 60 per cent came from the federal government in 2013 and 2014, with the rest coming from the provinces, according to a report from the Overseas Development Institute and Oil Change International.

The report also found that $2.7 billion in additional support flowed to the industry in the form of loans and loan guarantees, primarily through Export Development Canada. (All figures in U.S. dollars).

Alex Doukas, a spokesperson for Oil Change International, said that eliminating that support and redirecting it to clean energy sectors would be a way for Prime Minister Justin Trudeau to “hit the ground running” at the annual G20 leaders meeting on Sunday.

“It would also be very welcome in the lead-up to major climate talks in Paris next month,” Doukas said.

Canada is far from the worst offender. Russia provided eight times the subsidies and more than twice as much public financial support. Annual U.S. subsidies amounted to $20.5 billion, which on a per-capita basis is 20 per cent lower than Canadian levels.

The report considers a subsidy any dollar value associated with direct spending or lost tax revenue in a government budget.

Trudeau’s campaign platform pledged to “fulfill Canada’s G20 commitment to phase out subsidies for the fossil fuel industry,” starting with the Canadian Exploration Expenses tax deduction, which he would no longer make available for exploration projects deemed successful.

http://m.thestar.com/#/article/busi...l-fuel-industry-gets-274b-handout-report.html
 
petros

petros

The Central Scrutinizer
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THE TAX ENVIRONMENT
The taxes imposed by any particular government are
crucial to the viability of an oil and gas project. Too
high a tax burden can make a project uneconomic,
even though the project has excellent oil and gas
prospects otherwise.
Canada’s system of government consists of a federal
government and 10 provincial governments, as well
as three territories under the federal government’s
jurisdiction. The federal government, the provinces,
and the territories each levy income taxes on
corporations and individuals. Each of the provinces
and the territories also levies separate royalties
on oil and gas activity (for tax purposes, there is
little distinction between a province and territory;
consequently, any subsequent reference in this book
to provinces includes the territories).
In many respects, Canada’s tax environment is
favourable to business, and especially to oil and
gas activities. Where this industry is concerned,
the following are some of the favourable features
of the current tax system in Canada:
• The rates of income tax are low relative to most
other jurisdictions in which oil and gas activities
take place.
• The rapid write-off of intangible expenses and of
the cost of tangible assets permits taxpayers to
recover the costs of bringing a well into production
before they must pay any tax.
• Tax deductions for intangible expenses reduce the
tax liability of corporations. Such deductions can be
carried forward indefinitely.
• Operating losses can be carried forward for as
long as 20 years. This makes it almost certain that
a taxpayer that does develop viable oil and gas
operations will be able to use start-up losses.
• Only one-half of a capital gain is included in income.
• Most capital taxes have either been eliminated or are
being phased out in most jurisdictions in Canada.
• Most provinces have sales and use taxes that allow
businesses to pass along the tax to the ultimate
consumer. This means that, in the end, businesses
do not bear the cost of these taxes.
• A flow-through share mechanism allows
corporations to renounce intangible expenses
to investors. This allows corporations to monetize
expenses that they are unable to utilize in the
foreseeable future.
• There is no withholding tax on interest paid by a
corporation to an arm’s-length non-resident lender.
• Most of Canada’s treaties provide that the rate of
withholding tax on dividends paid to a non-resident
parent is limited to 5 percent.
The following features of the Canadian tax system
are not so favourable to the oil and gas industry:
• Some provinces (e.g., Manitoba, Saskatchewan,
and British Columbia) impose sales and use taxes
that are borne by businesses, rather than by the
ultimate consumer.
• Some provinces require oil and gas operators
to pay royalties rather than profit-based taxes.
• There are other taxes and charges for which a
business is liable, whether or not it is profitable.
These include Canada Pension Plan and
Employment Insurance payments at the federal
level, and health taxes and payroll taxes at the
provincial level.
 
petros

petros

The Central Scrutinizer
Nov 21, 2008
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captain morgan said:
Herein lies the problem, I am in O&G and my welfare cheque (subsidy) has not been received.

That said, this is the big reason that I am so pleased with the $2.7 billion handout.. Generally that is dispensed in cash form
Click to expand...

No cheque for me either. You can't cash a cheque that doesn't exist.
 
MHz

MHz

Time Out
Mar 16, 2007
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captain morgan said:
Herein lies the problem, I am in O&G and my welfare cheque (subsidy) has not been received.

That said, this is the big reason that I am so pleased with the $2.7 billion handout.. Generally that is dispensed in cash form
Click to expand...
It goes to the wealthy stockholders rather than pawns like you. Loans and such has the money go directly to the World Banks, none of which are in Canada.
 
petros

petros

The Central Scrutinizer
Nov 21, 2008
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I don't know whether subsidy cheques which don't exist go to a few select shareholers?

Why do you say such crazy things? Can't you stop yourself?
 
mentalfloss

mentalfloss

Prickly Curmudgeon Smiter
Jun 28, 2010
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Yes it's all a conspiracy now.

 
MHz

MHz

Time Out
Mar 16, 2007
41,030
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Red Deer AB
petros said:
I don't know whether subsidy cheques which don't exist go to a few select shareholers?

Why do you say such crazy things? Can't you stop yourself?
Click to expand...
Let's say your stocks make you a stooge that will be left holding an empty bag while 'the owners' get away with all the money. Do you not know what piece you are on the grand chessboard??
 
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