Oct. 4, 2012
/CNW/ - In a report released today by The School of Public Policy, authors
and Duanjie Chen offer an international and interprovincial comparison of tax and royalty systems impacting the oil industry.
"As a whole,
falls in the middle of the pack in terms of competitiveness and economic neutrality," Mintz said today. "But within
there is a great deal of disparity across the provinces - and that disparity matters. The goal of a royalty system should be to balance public revenues with investment. In those terms, some provinces do well, others less so."
The authors compare the energy royalty regimes of
the United States
. They also evaluate individual provinces (
& Labrador and
) and states (
). The metric used is the Marginal Effective Tax and Royalty Rate (METRR), which indicates the impact of taxes and royalties on investment.
Contrary to common perception the authors find that the fiscal burden on the energy sector is higher than that of other industrial sectors in
, measuring conventional production,
, B.C. and
actually impose the highest fiscal burdens because of revenue based royalty regimes - this discourages investment. The lowest fiscal burden is for offshore development in the Atlantic provinces.
is the most attractive to investment based on METRR.
However, the authors argue that these numbers do not tell the whole story. "
are actually encouraging too much investment in their oil industry and are poor rent collectors", says Mintz.
Mintz and Chen contend that the regime in place for the
oil sands is in fact the closest to an optimal rent-based system. Although the METRR for the oil sands is quite a bit higher than it is for
, the regime affecting the oil sands has fewer disparities across business activities and is more in-line with the tax burdens placed on other industries within the economy.
The report can be found at
SOURCE The School of Public Policy -
University of Calgary
Video with caption: "Video:
, Director of The School of Public Policy, shares the findings of a report that contrasts international and provincial royalty regimes". Video available at: