Tax rebate offered to lure LNG producers

Income tax paid in the first three years would be applied as a rebate to higher rates in year four and five

The first LNG tankers could be loading up in B.C. by 2017

VICTORIA – The B.C. government plans to impose a two-tiered income tax on liquefied natural gas exports, with rebates in early years until investors recover the capital cost of building LNG processing plants.

Finance Minister Mike de Jong presented the framework for LNG income tax with Tuesday’s provincial budget. It describes an income tax rate of up to 1.5 per cent on net revenue in the first three years of LNG production, with a second tier rate of up to seven per cent applicable after five years.

Income tax paid in the first three years would be applied as a rebate to higher rates in year four and five, so the top rate wouldn’t take full effect until year six. Producers also pay royalties on natural gas at the wellhead, and B.C.’s carbon tax would apply to gas burned in processing and refrigeration of LNG.

De Jong said he the final income tax rates will be set when the government introduces legislation this fall. That is when international companies are expected to begin making final investment decisions.

The budget includes government revenue and expense forecasts out to 2017, with no tax revenue projected from LNG until later. De Jong said the government is sticking to its “lofty” goal of having three export plants operating by 2020.

In his response to the budget, NDP finance critic Mike Farnworth said the government has missed its original target to have the LNG tax regime in place by the end of 2013. He zeroed in on Premier Christy Clark’s promise to have at least one LNG pipeline and plant in operation at Kitimat by 2015, and her campaign pledge to retire B.C.’s growing debt.

“Judging from today’s lack of LNG revenue, the premier’s promise to magically wipe away $70 billion worth of debts in 15 years is surely a fantasy,” Farnworth said.

Natural Gas Development Minister Rich Coleman denied the suggestion that the tax structure is behind schedule. He said he met with officials from Shell and other proponents last week, and they are “comfortable” with the progress to date.

“The opposition wouldn’t know LNG if it came up and bit them,” Coleman said. “They’re totally uninformed. They don’t support the process, they don’t support LNG, they never have.”

In a speech to the B.C. Chamber of Commerce in Vancouver Wednesday, Clark said not all of the 10 LNG plants currently proposed will proceed, but even one would be a significant source of revenue.

Asked by reporters if the budget means no LNG revenues by 2017, Clark said it is still possible.

“We don’t want to book money that we don’t have yet,” Clark said.

Just Posted

Police Briefs: Electric bicycle stolen, cars continue to be targeted

A number of car break-ins last week all had something in common: unlocked doors

Police investigating ‘unprovoked attack’ at Uptown bus stop

Man was attacked while waiting at Douglas St bus stop Sunday night

Intense winds could reach 70km in Greater Victoria

Environment Canada issued wind warning for Dec. 17

Saanich police are seeking suspect in sexual assault report

Incident happened early Saturday morning near Rudd Park

Royals defeat Giants in Teddy Bear game in front of enthusiastic crowd

Griffen Outhouse recorded his 100th career WHL victory

10-lane George Massey bridge too big, B.C. study says

Consultants say replacement tunnel cost similar to new bridge

Canada’s robust credit rating should calm unease about federal deficits: Trudeau

Trudeau says Canada’s long-running triple-A rating means experts have confidence in his government’s approach to the economy

CIBC shrinks event after Whistler mayor irks oil producers

After Whistler sent a letter to a Calgary-based oilsands giant, several energy firms said they would back out of the CIBC event.

Couple caught up in B.C. Legislature bomb plot to learn their fate

John Nuttall and Amanda Korody were arrested as part of an undercover RCMP sting on Canada Day 2013

Trial rights of accused spy for China at risk, lawyer tells Supreme Court

The lawyer for a man accused of trying to spy for China says federal foot-dragging over secrecy is endangering his client’s right to timely justice.

‘Recall fatigue’: Canadians may avoid certain foods over holidays

In the winter, Canada’s supply of fresh fruit and vegetables tends to come from very specific areas.

Sea King helicopters make formal retirement flight Monday

Monday flight pattern includes Duncan, Nanaimo, Parksville and Qualicum

Airline passengers could get up to $2,400 for delays, damaged bags: Canadian agency

Canadian Transportation Agency is releasing draft regulations for public feedback

Most Read