Harper government considers new LNG tax breaks in federal budget

Must Read

Fort St. John to move to weekly garbage pickup starting April 6

FORT ST. JOHN, B.C. - Fort St. John City Council has approved increasing garbage pickup to weekly...

Number of coronavirus cases up to 970 in BC, cases in Northern Health up to 14

VICTORIA, B.C. – Provincial Health Officials provided an update, on Monday afternoon, on the latest information regarding the coronavirus...

Fort St John sees lots of snow, improved conditions expected for later this week

FORT ST. JOHN, B.C. - Fort St. John and the Peace Region experienced a significant amount of snowfall over...

This information has come to light as a result of internal records obtained by Reuters through an Access to Information request.

The purpose of new tax breaks – proposed by the Canadian Association of Petroleum Producers (CAPP) – is to give incentive to companies that have stalled LNG development in the midst of falling oil prices, says Reuters.

The report says the tax breaks would reclassify LNG export plants as manufacturing assets. Under its current classification, LNG facilities can writes off 8 per cent of their total capital investment each year, whereas under the new proposal, they’d be authorized to write off 30 – 50 per cent of capital investment per year.

- Advertisement -

Community Interviews with Moose FM

The classification of manufacturing assets has been in place since 2007, and the document obtained by Reuters was prepared ahead of a meeting with industry representatives last October.

Companies have long complained that LNG development cost is too high while the profit margin is too thin, according to Reuters.

This proposal has been made, and denied, during the last two federal budgets, and the next one is due in April 2015.

If implemented, Reuters says the proposed measure would have the federal government lose “hundreds of millions of dollars” in tax revenue.

CAPP estimates approximately $3 billion would be added to Canada’s GDP over 20 years if the proposal is approved, says Reuters.

However, the report says it’s still unclear whether this incentive would be enough of a push for companies to break ground on LNG development while the market remains unstable.

The NEB has so far approved 10 LNG export licences, and has another 10 applications to go through – none of which have made a final investment decision.



Latest Stories from Energeticcity.ca

More Articles Like This