On March 5, 2013, the British Columbia provincial budget passed
second reading in the provincial legislature. In connection with
the budget, Premier Christy Clark has recently announced more than
$100 billion worth of new royalties and taxes for British
Columbia's nascent liquefied natural gas industry. In the short
term, the provincial budget is relying on new royalties and rising
gas prices to increase revenue by $138 million in 2013-14, this at
a time when low North American gas prices have producers decreasing
production. Longer term, the government plans to implement a new
Liquefied Natural Gas ("LNG") export tax. The government
has yet to explain how the LNG export tax will be implemented, but
overall, it is anticipated to generate $100 billion over 30 years
for a provincial "prosperity fund" similar to
Alberta's Heritage Savings Fund. This estimate is based on five
LNG plants being built in the province.
Unfortunately, the announcement of the proposed LNG export tax
is adding significant near-term uncertainty to the industry's
plan to develop LNG export capacity on the west coast of British
Columbia. For example, Chevron, which recently took a lead role in
the Kitimat LNG project, has expressed concerns about the economics
of LNG in northern British Columbia and CEO John Watson has warned
"some projects will go and some will not". The
announcement also comes at a time when industry is seeking
certainty from the federal government in relation to federal
taxation of LNG exports. In a submission to the standing committee
on finance for the next federal budget, the Canadian Association of
Petroleum Producers is asking the federal government to tax LNG as
a manufactured good rather than a raw material since it is changed
from gas to liquid for transport.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).