Canadian Manufacturing

Harper announces tax breaks for LNG industry in B.C.

by The Canadian Press   

Canadian Manufacturing
Regulation Oil & Gas B.C. lng politics taxes

Federal tax breaks announced despite not a single LNG project reaching final investment decision in province

SURREY, B.C.—Prime Minister Stephen Harper has announced federal tax breaks for British Columbia’s liquefied natural gas (LNG) industry, though not a single project has yet reached a final investment decision.

Harper, who made the announcement at a technical university in Surrey, B.C., said companies will receive a capital cost allowance of 30 per cent for equipment used in natural gas liquefaction and 10 per cent for buildings at a facility that liquefies natural gas.

Tax relief will be available for capital assets acquired between now and 2025.

Harper said the tax incentives will provide the right conditions for the LNG industry to succeed and compete in the global economy while spurring job growth.


“Developing our natural gas resources and encouraging LNG export growth will mean good, well-paying jobs for thousands of British Columbians, including in our aboriginal communities,” Harper told students at Kwantlen Polytechnic University.

“And it’s diverse as jobs in construction, jobs in facilities, once they’re built.”

B.C. Premier Christy Clark said later that the change in the capital cost allowance will make the province more attractive for LNG companies, especially during the global slump in oil prices.

“We’re already more competitive than Australia. Our real main competition in the world is the (United States), and the west coast of North America,” she said, referring to Washington, California and Oregon.

Clark said B.C.’s low taxes, three consecutive balanced budgets and billion-dollar surplus this year are all draws for investors.

She won re-election in 2013 by promising a multi-billion-dollar LNG industry that she said would create 100,000 jobs and generate enough revenue to wipe out the provincial debt.

However, there was little mention of LNG in this week’s provincial budget.

The government said it was holding off including any LNG revenues until final announcements are made for any of 18 prospective projects.

Last November, the province passed three major pieces of LNG-linked legislation covering taxes, emissions standards and aboriginal involvement.

Clark said then that legislation on the tax and on the environmental side needed to pass before the industry could get going.

The province has said the income tax legislation means one mid-sized LNG plant would pay about $800 million in taxes annually, which is equivalent to taxes that B.C.’s entire forestry industry pays each year.

One plant producing 12 million tonnes of LNG annually would pay as much as $9 billion in taxes over 10 years.

But declining natural gas prices have meant companies with LNG plans are still hedging on making final investment decisions.

“We are still on target, we believe, for three projects by 2020 (to be) up and running,” Clark said.


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