This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Energy Industry Taxed More Than Other Industries - Most Provinces Fail At Creating Effective Tax And Royalty Regimes

CALGARY, Oct. 4, 2012 /CNW/ - In a report released today by The School of Public Policy, authors Jack Mintz and Duanjie Chen offer an international and interprovincial comparison of tax and royalty systems impacting the oil industry.

"As a whole, Canada falls in the middle of the pack in terms of competitiveness and economic neutrality," Mintz said today. "But within Canada 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 Brazil, Canada, Norway, the United Kingdom and the United States. They also evaluate individual provinces ( Alberta, B.C., Saskatchewan, Newfoundland & Labrador and Nova Scotia) and states ( Arkansas, Colorado, Pennsylvania and Texas).  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 Canada.

Within Canada, measuring conventional production, Alberta, B.C. and Saskatchewan 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.  Nova Scotia is the most attractive to investment based on METRR.

However, the authors argue that these numbers do not tell the whole story. " Nova Scotia and Newfoundland 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 Alberta 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 Nova Scotia, 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 www.policyschool.ucalgary.ca/publications

SOURCE The School of Public Policy - University of Calgary

Video with caption: "Video: Jack Mintz, Director of The School of Public Policy, shares the findings of a report that contrasts international and provincial royalty regimes". Video available at: http://stream1.newswire.ca/cgi-bin/playback.cgi?file=20121004_C4576_VIDEO_EN_18940.mp4&posterurl=http://photos.newswire.ca/images/20121004_C4576_PHOTO_EN_18940.jpg&clientName=The%20School%20of%20Public%20Policy%20%2D%20University%20of%20Calgary&caption=Video%3A%20Jack%20Mintz%2C%20Director%20of%20The%20School%20of%20Public%20Policy%2C%20shares%20the%20findings%20of%20a%20report%20that%20contrasts%20international%20and%20provincial%20royalty%20regimes&title=THE%20SCHOOL%20OF%20PUBLIC%20POLICY%20%2D%20UNIVERSITY%20OF%20CALGARY%20%2D%20Energy%20Industry%20Taxed%20More%20Than%20Other%20Industries%20%2D%20Most%20Provinces%20Fail%20at%20Creating%20Effective%20Tax%20and%20Royalty%20Regimes&headline=Energy%20Industry%20Taxed%20More%20Than%20Other%20Industries%20%2D%20Most%20Provinces%20Fail%20at%20Creating%20Effective%20Tax%20and%20Royalty%20Regimes

Copyright 2011 PR Newswire. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs