Panic time: As oil goes, so does Canada’s economy
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Yeah well how many times have you been asked to prove it? Show the subsidies instead of tax credits. Can you? Show 1. Just 1.
Here is a nice article for you to peruse.
IMF’s imagined $34-billion: Silly stats are behind claims that Canada subsidizes oil*industry
In a recent opinion piece for The Tyee, freelance writer Mitchell Anderson bemoaned Canada’s “incredible” $34-billion a year in energy subsidies. This figure is indeed not credible, since the IMF study it’s based on sees subsidies where there are none.
The vast bulk of The Tyee’s ludicrous figure falls under the rubric of negative “externalities,” that is, societal costs presumably caused by a particular economic activity. According to the wonks at the IMF, fossil fuels are not sufficiently taxed to make up for externalities like air pollution, carbon emissions, and even traffic congestion and traffic accidents.
The cost of these is evaluated by the IMF with their crystal balls at nearly $20-billion just for transportation fuels like gasoline and diesel. Another $7.3-billion is for un-priced carbon emissions from burning natural gas, and an additional $4.5-billion is for un-priced carbon and sulfur dioxide emissions for the coal industry.
This is silly for a number of reasons. First of all, there are already plenty of taxes on fossil fuels. In 2012, gasoline taxes averaged 31% of the pump price. Federal excise taxes and provincial fuel taxes combined generated revenues of $13.7-billion for the 2012-2013 year. This means each Canadian – man, woman, or child – pays an average of almost $400 a year in taxes related to fuel consumption.
As for the production side, the industry that develops oil and gas resources in this country pays on average $18-billion a year in taxes and royalties to different governments across Canada. Hardly chump change.
More fundamentally, deciding what counts as an externality and how much that externality is worth in dollar terms is a tricky business, and it’s most definitely not the same thing as putting a number on fossil-fuel subsidies. It’s true that if Canadians could not move around by car as easily and affordably as they can now, there would be less traffic congestion, and the air in our cities might be less polluted. But if we all reverted to heating our homes with firewood instead of natural gas, air quality would suffer, and our forests would be stressed as well.
As for traffic jams, in addition to their direct costs in terms of productive hours lost, it’s also true that they’re stressful and that stress is a cause of heart disease. Why not include the additional costs to our health care system in our externality calculation?
These many billions of dollars, Anderson claims, could be put to better use. They could finance the building of hundreds of kilometres of light rail, fix our crumbling roads, or provide cheap daycare to millions of children.
The problem is that these billions of dollars simply do not exist, and trying to extract them from oil, gas, and coal producers (and consumers) would have devastating economic consequences. Production and consumption of these energy products would be discouraged, and with less production, higher tax rates would not be translated directly into the higher tax returns envisaged by would-be interventionists with their rose-coloured glasses. Indeed, economic growth would slow across the board, leading to less tax money in government coffers.
Supposed subsidy programs are actually just a particular tax treatment common to the natural resources sector
As for the $840-million in producer support to the oil industry (with some going to natural gas and coal producers) that Anderson mentions, this is based on an OECD study that at least has its feet on the ground. But even here, there is much to criticize.
This figure is in line with another, earlier analysis from the Global Subsidies Initiative that I examined in detail in a recent publication. What I found was that even this much smaller number makes subsidies to the oil industry seem far more generous than they actually are.
This is because many of the supposed subsidy programs are actually just a particular tax treatment common to the natural resources sector as a whole, which is faced with a specific economic reality. Given the large amounts of start-up capital involved, the high degree of risk, and the many years that go by between initial investments and (hopefully) profits, companies are allowed to reduce the taxes they have to pay in the short term and defer them until later in the production cycle.
But this is not a subsidy. It’s just a common-sense measure for ensuring the neutrality of the tax system between different industries. And while governments get less revenue initially, they ensure the economic viability of certain projects that would not otherwise see the light of day. This means more tax revenue down the line when these projects are finally carried through and wealth is created.
As for actual subsidy programs, the largest of these are being eliminated, and will be gone within the next two years. This means that of some $211-million of real subsidies that currently exist, just $71-million will remain as of 2016.
Now, $71-million of subsidies is still $71-million too much, in my opinion. But it’s a very small fraction of the subsidies handed out by the federal and provincial governments to various sectors of the economy, which totalled a whopping $15.8-billion in 2009. And it’s a far cry from the tens of billions touted by the IMF and uncritically repeated by The Tyee.
Questions?
He can't Petros... All that is left is to keep repeating the party line as spoon fed to him by the IPCC lobby group to which he prays.
Buddy has no clue... Never will either
He has as much trouble understanding tax credits as Putz does.
PS Why would oil sands need exploration subsidies?
Ever heard of GEM?
That article you posted across actually endorses the GSI report on subsidies that I've posted before.
Why care about facts?
http://www.iisd.org/gsi/fossil-fuel-subsidies
Why care about facts?
http://www.iisd.org/gsi/fossil-fuel-subsidies
Show the Canadian Gov fossil fuel subsidies. You shouldn't have any trouble linking to Fed websites outlining alleged subsidies so where are they?
Ever heard of C-13¿
Through Canada’s Economic Action Plan, the Government is committed to improving the fairness and neutrality of the tax system across sectors of the economy and to supporting the commitment by G-20 Leaders to rationalize and phase out over the medium term inefficient fossil fuel subsidies.
About the Initiative
With the oil sands sector vibrant and growing, Budget 2007 announced the phase-out of the accelerated capital cost allowance for tangible capital assets in the sector. Budget 2011 built on this change by announcing a reduction in the deduction rates for tax purposes for intangible capital expenses in oil sands projects to align them with the rates applicable in the conventional oil & gas sector:
The costs of oil sands leases or other oil sands resource property, which could previously be treated as Canadian Development Expense (deductible at a rate of 30% per year on a declining balance basis) are now treated as Canadian Oil and Gas Property Expense (deductible at a rate of 10% per year on a declining balance basis).
Pre-production development expenses incurred for the purpose of bringing a new oil sands mine into production are treated as Canadian Exploration Expense (100%*deductible in the year incurred). These expenses will start to be treated as Canadian Development Expense on a gradual basis over the 2013 to 2016 period. In recognition of the long time frames involved in developing oil sands mining projects, transitional relief is provided and the Canadian Exploration Expense treatment will be maintained for expenditures incurred before 2015 on grandfathered projects.
Initiative Update
Bill C-13, the Keeping Canada’s Economy and Jobs Growing Act, which implemented these legislative changes, received Royal Assent on December 15, 2011.
Find Out More
For more information, please visit the Department of Finance Canada website.
I'm aware of the bill petros.
I even had cap agree that the subsidies are a percentage of GDP and that they were $3B per year as of 2013.
We did this by taking out all of the things that he didn't like on one of the reports and applying that percentage to GDP for that year.
I even had cap agree that the subsidies are a percentage of GDP and that they were $3B per year as of 2013.
We did this by taking out all of the things that he didn't like on one of the reports and applying that percentage to GDP for that year.
What does the dictionary say?
tax cred·it
noun
an amount of money that can be offset against a tax liability
sub·si·dy
ˈsəbsədē/
noun
1.
a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.
"a farm subsidy"
a grant or contribution of money.
synonyms: grant, allowance, endowment, contribution, donation, bursary, handout; More
2.
historical
a parliamentary grant to the sovereign for state needs
I always get a kick out of the stuff Tyee Snooze puts out about how the MAN is ripping everyone off.
One flaw even in this article, although I suppose it shows where the money comes from is the myth that corporations pay any taxes, including royalties. Taxes, royalties, permits, etc are all a cost of business that is simply passed on to the consumer. Now this is fine when that consumer is in a different country but when the consumer is Canadian it is simply a cost paid by the taxpayer. GOvernments and even may people like hidden taxes because few people will know how badly their government is ripping them. All for their own good of course.
Flossy can't afford to understand the facts on this.... It totally undermines what skimpy and fault-ridden position that he has.
I will greatly appreciate if you don't include me in your lies Flossy
Consumer and taxpayer are pretty much the same. And it is a fact that any tax on business is simply passed on to the consumer.