Graph shows all provincial taxes as they would apply to a medium-sized facility producing 12 million tonnes of LNG per year

LNG tax drops in softer gas market

B.C. government scales down tax plan as Asian gas market slows down, Russia sells to China and oil prices decline

VICTORIA – Liquefied natural gas producers are being asked to pay a new tax of 3.5 per cent on their profits for the first 20 years of operation in B.C., after deducting their startup costs.

Finance Minister Mike de Jong unveiled the LNG tax system Tuesday, describing it as lower in total taxes and royalties than existing and proposed LNG export facilities in Australia, Alaska, Oregon and other U.S. states that are B.C.’s main competitors.

De Jong said B.C. scaled back its plan to charge up to seven per cent in the face of declining gas market conditions, including slower growth in China and its new long-term deal to buy pipeline gas from Russia. Japan is also considering restarting its nuclear power program after the 2011 Fukushima earthquake, and oil prices have declined in recent months.

Under the B.C. plan, a single medium-sized LNG plant on the B.C. coast would pay about $800 million a year in total provincial taxes after a three-year construction period. That includes the new LNG tax, royalties on gas produced in B.C., carbon tax, provincial sales tax and corporate income tax.

“That’s more than we got from the whole forest sector this year,” de Jong said.

There are currently 18 proposals for LNG plants in B.C., ranging from small to those twice the size of the finance ministry’s medium-plant example. One of the largest is LNG Canada, a consortium of Shell, PetroChina, Mitsubishi and Korea Gas to build a pipeline and export terminal at Kitimat.

LNG Canada issued a statement Tuesday saying it will continue to work on its B.C. plan.

“There is much more work to do prior to a final investment decision for LNG Canada and we will continue working with First Nations and local communities, as well as municipal, provincial and federal governments,” it said.

De Jong said the B.C. Liberal election promise to pay off the province’s debt with LNG revenues remains possible, but it will take longer than earlier estimates. A single medium-sized is worth $8 billion in revenues over a 10-year period of full operation.

NDP natural gas critic Bruce Ralston said the government had to slash its tax plan after it hyped the LNG revenue windfall to voters in the 2013 election campaign. That put B.C. in a weaker negotiating position with international investors, Ralston said.

The new tax takes effect in 2017, with an effective rate of 1.5 per cent for three years as companies construct LNG plants. Only one or two small facilities are expected to be ready by then. The rate rises to 3.5 per cent on net income after capital costs are deducted, and to five per cent effective 2037.

Just Posted

Big Brothers Big Sisters seek mentors for kids who need a guiding light

September marks National Big Brothers Big Sisters of Canada Month

Former employee at B.C.’s oldest bakery says staff got no notice of closure

Willie’s Bakery staffer didn’t receive any severance

Woman arrested as Saanich Police tape off Hwy 17 tent city

Province of B.C. calls in local police to clear campers

Lawyer for Victoria homeless camp questions offer by Saanich Police

John Heaney says breaking up camp puts people at risk because it seperates them from support

Victoria Mayor Lisa Helps calls for audit on Johnson Street Bridge project

The bridge took three years and $40 million more than initially expected

Saanich homeless camp residents at a standstill, evicted, prohibited from local parks

‘Ultimate goal is to get people into shelters and longer-term housing,’ Ministry of Municipal Affairs and Housing

Ministry of Agriculture commits $300,000 to help B.C. farmers obtain land

B.C. Land Matching Program supports access to affordable farmland for young farmers

Canadian air force short 275 pilots

Attrition outpaces recruitment and training claims Air Force

Teacher suspended after physically shushing, saying ‘shut up’ to student

Grade 5 student reported feeling ‘confused and a little scared’

A B.C. society helps to reforest Crown land after wildfires

Forest Enhancement Society of BC focuses on wildfire mitigation and the reforestation

B.C. marijuana workers may face U.S. border scrutiny

Cannabis still illegal federally south of the border

New political party holds an informational session in Vernon

Maxime Bernier’s The People’s Party of Canada draws about 2o interested patrons to Vernon pub.

B.C. MLAs reminded of rural school struggles

Finance committee hears of falling enrolment, staff shortages

B.C. VIEWS: ’Not photo radar’ coming soon to high-crash areas

ICBC deficit now largely due to reckless and distracted driving

Most Read