STOP: Stop Tar Sands Operations Permanently

Just another weblog

Big oil soaks up $1.4B in tax breaks

Posted by mhudema on May 9, 2008 – Business – Big oil soaks up $1.4B in tax breaks

With companies reaping huge profits, it’s time to end corporate handouts, critics charge

May 08, 2008

Ottawa Bureau
OTTAWA—Not only are Canadian motorists paying record high prices at the gasoline pumps, they are handing the big oil companies $1.4 billion a year in tax breaks.

Critics say with oil companies making huge profits the situation in Canada defies logic.

They say consumers might be able to stomach the corporate handout if the money was being used to protect the environment or clean up the mess left behind in the oil sands instead of going into the pockets of the likes of Petro Canada and Imperial Oil.

“They are completely unjustifiable . . . these companies do not need taxpayers’ help. They’re the ones who are doing the fleecing,” NDP Leader Jack Layton said.

“They are making world record profits and we’re giving them tax subsidies. It makes no sense and at the same time they are polluting the planet,” Layton said, pointing to this week’s discovery of hundreds of dead ducks in a toxic tailings pond belonging to Alberta oil sands giant Syncrude Canada Ltd.

While the federal government is generous to the oil companies, they in turn have been generous with the Conservatives over the years, handing over tens of thousands to the party coffers before donations rules were changed.

Now that corporations and unions are prohibited from donating to federal political parties, the boards’ directors make personal donations of up to $1,000 a year.

Finance Minister Jim Flaherty announced in March the end of a controversial tax break for oil sands producers, but cushioned the blow by not phasing it out until 2010.

In his budget speech, Flaherty announced the government will phase out the accelerated capital cost allowance that allows oil sands producers to write off the cost of their investment for income tax purposes an accelerated pace.

Greg Stringham, vice-president of the Canadian Association of Petroleum Producers, said dramatically increased Alberta oil royalty payments and the new federal carbon tax are gobbling up any tax breaks.

The Conservative government has argued it is doing its part for the motoring public by reducing GST by two percentage points, but even so Ottawa is expected to reap billions of dollars in windfall taxes..

The former Liberal government introduced the Accelerated Capital Cost Allowance to encourage exploration when oil was selling for $30 a barrel, but now that it’s more than $115 per barrel there is no justification for it, Liberal MP Dan McTeague (Pickering-Scarborough East) said.

“The last thing we should be doing is providing a very generous concession to companies who are making money hand over fist,” McTeague said.

In opposition, the Conservative blamed taxes as contributing toward the high cost of gasoline, “but they are keeping quiet now,” he said.

The following represents just some of the tax favours handed out by the federal government using, according to the environmental think tank, the Pembina Institute. Company annual reports were used to gather the data.

Suncor posted federal tax savings of $292 million in 2006 and $427 million in 2007 and $472 million in future income tax balances attributable to federal rate reductions.

Synenco realized $2.6 million in future tax savings in 2007 as a result of federal income tax rates.

Canadian Natural Resources will see $864 million in future federal tax savings owing to rate reductions in 2007.

Petro-Canada has realized $228 million in tax savings in 2006 and 2007.

The Pembina Institute says between 1996 and 2002, inclusive, the federal government paid out $8.3 billion.

Green Party Leader Elizabeth May said Canada can’t afford to wait until 2010 to kill the tax breaks.

“It no longer makes any sense at all and everyone knows it makes no sense,” May said.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: