Wednesday, September 26, 2007

Canada Shooting At Their Own Feet

Jeff Saut in his weekly comments discusses the moves in Alberta to put a tax chokehold on its greatest strength.
For much of this year we have roiled against our government’s increasing movement towards intervention and regulation. Little did we know we had to worry about the same thing in Canada’s most business-friendly province, namely Alberta. As we understand it, last week the Alberta Provincial Government proposed changes to Alberta’s tax code that raises the existing Royalty regime for the province’s oil industry. The proposed (emphasize “proposed”) changes would hike the government’s Royalty rate from 25% to 33% combined with a sliding scale “Oil Sands Severance Tax” (OSST). Taken together, these changes could lift the government’s “take” from roughly 47% to 64% leaving the remaining 36% for the developers/investors. Consequently, the folks providing the “risk capital,” and developing the projects, by default become minority participants in their own projects. This, ladies and gentlemen, is the sort of thing one expects to hear from Venezuela, not Canada!
The one constant across all governments is the inability to keep their hands off any enterprise that is doing well. Spending even ten percent of that effort on cutting spending would do immeasurable good.
here is an article on the tax proposals:

Alberta panel calls for hefty tax increases on oil sands, oil and natural gas

No comments: