Archive for May, 2005

* Canadian Government Oil Subsidies

Posted on May 23rd, 2005 by Dave Johnson. Filed under Energy, Politics.

The Canadian government in 2003 decided to reduce the corporate tax rate for natural resource companies. This includes but is certainly not limited to oil and gas companies. The tax rate for these companies is going to be reduced from 28% in 2002 to 21% in 2007. Furthermore, they are going to introduce a 10% tax credit for exploration.

According to the Globe Investor, the top 10 oil and gas companies in Canada had revenue of over $86 billion while the top 300 companies on the Globe Investor’s list had revenue of over $115 billion - the industry wide numbers quoted by the Canadian Association of Pretroleum Producers of $77.5 billion. If we assume that these companies have profits of about 5% then profits are around 5 billion. So if the Canadian government is reducing the tax rate by 7%, that would be equivalent to a government subsidy of $300 million a year. Add on top of that the 10% tax credit for exploration costs and you are looking at nearly $1 billion government subsidy for the oil and gas industry.

Now if you look at the Canadian government climate change website website you see how this corporate climate criminals tax break pales in comparison to what they are committing to the Renewable Energy Deployment Initiative (REDI) - a mere $51 million - only 5% of the tax breaks given to big oil.

It seems quite ironic that the government climate change website says “Taking Action on Climate Change - Together, we can do it” when in fact while claiming that they are doing something to combat climate chaos the government is promoting the use of fossil fuels!

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