Thursday, October 23, 2014
Province sets LNG tax rate at 3.5 per cent
The much anticipated setting of the province's tax regime for proposed LNG development was delivered to the British Columbia Legislature on Tuesday afternoon, with the Liberal Government of Premier Clark outlining the much anticipated details of their financial blue print for the project.
Finance Minister Mike de Jong introduced Bill 6 to the Legislature in the afternoon sitting, outlining how the taxation process will commence at 1.5 per cent during the start up process for the industry, growing to 3.5 per cent once the plants proposed for the province are in operation and capital investments have been deducted.
The overall plan would see the tax rise to five percent by 2037.
Those number are clearly a significant shift in the province's financial expectations, which at one time had been pegged to be as high as 7 per cent.
However, the Premier was determined to the make the best case for Tuesday's announcement, highlighting the day as another benchmark for her Government's LNG plans.
“This marks an important next step in attracting an LNG industry in British Columbia. Our competitive tax framework provides certainty and stability for proponents, long-term revenues for British Columbians, and encourages high-paying jobs that will come and be generated by the establishment of this new industry.”
The indications from the LNG industry are not surprisingly positive with the Kitimat based LNG Canada project the first to offer up it's comments of support to the numbers provided by the Liberal government.
That proponent was followed by others with plans for LNG terminal development, with the universal theme being that of a welcoming approach to the numbers as provided by Mr. de Jong.
For the North Coast, the prospects for LNG development received a boost earlier in the day from an item that the Bloomberg News Service offered up.
An advisory that suggested that Petronas, the Malaysian energy company looking at a project for Lelu Island, or as Bloomberg News puts it, Petronas is "testing lender interest" reportedly seeking out options for 12 billion dollars of financing.
The tax regime announced on Tuesday, should provide a further bump in the prospects for LNG development on the North Coast, a positive move for those looking to see the Industry gain its foothold in the region and deliver some of the promised employment and industrial expansion predicted.
And while the tax regime as discovered is one that is of a positive development of for the LNG industry. The lowering of expectations on the revenue fronts, combined with incentives and sliding scale of tax levels, is getting a fairly thorough review from the media.
With many noting that the developments of Tuesday, make for a definitive reduction for the ambitious Prosperty Fund promoted by the Liberals during the last election.
The full reviews of the legislation and the fall out from it can be examined below:
Vancouver Sun-- B. C. cuts proposed LNG tax in half to make province more competitive
Vancouver Sun-- B. C.'s new tax regime pleases one company offers certainty to industry
Vancouver Sun-- LNG goodies, incentives dent Liberals' vaunted Prosperity Fund
Vancouver Province-- Turns out the LNG bonanza promised by the Liberals won't be as spectacular
CBC-- B. C. LNG tax rates lower than first promised
CKWX-- Province cuts its LNG tax rate
Global BC-- BC Government plans 3.5 per cent LNG Tax
Globe and Mail-- B. C. slashes proposed rate for LNG tax
Globe and Mail-- B. C. Liberals mum on promised LNG Prosperity Fund