LNG tax regime delay not surprising, says MLA

Terrace MLA's comments follow provincial announcement that the province is putting off the release of its LNG tax proposal until February

  • Nov. 22, 2013 8:00 a.m.

SKEENA NDP MLA Robin Austin says he’s not surprised the provincial government has delayed the release of its much anticipated liquefied natural gas (LNG) tax regime.

“Really, the province is only now realizing it has to stop cheerleading. They have some very very complicated work to do to achieve their goals,” said Austin, who is his party’s critic on LNG development.

His comments follow the Nov. 19 announcement by LNG minister Rich Coleman that the province is putting off the release of its tax proposal until February. An announcement had been expected this month.

It’s the second time Coleman has announced a delay in how the provincial government says it will earn revenue from the LNG industry.

LNG companies and the province have been in negotiations for some time now over how much the latter would pay to extract and process natural gas.

The lack, so far, of a tax regime is said to be holding up the signing of LNG sales contracts because companies don’t know how much tax they’ll be paying.

Austin suspects the provincial government has bumped into two much-publicized but contradictory goals – one to provide billions of dollars to taxpayers and the other to provide an attractive climate for LNG investors.

“Here they are saying they are going to pay down the debt and also pay for health care and education at the same time as saying they are going to have the most competitive jurisdiction in the world for LNG,” he said.

“The LNG companies will want to pay the lowest amount for the resource while it’s the job of the government to maximize the resource for the people who own it and that’s the people.

“I think they’re going to end up with less and are going to start to spin that,” Austin added of the provincial government.

LNG companies in Australia, for instance, negotiated a system whereby they are able to deduct the difference between a project’s final costs from its first estimates from royalties owed.

Austin said it’s a pretty generous plan with the taxpayer absorbing the risk of projects instead of company shareholders.

The MLA is also wondering how the province is going to meet its own legislated greenhouse gas emission goals while encouraging the construction of LNG plants which will burn natural gas for power.

“Obviously there’s going to be a problem here,” said Austin.

He believes, based on hints coming from the province, the provincial government will try to sell the idea it is reducing greenhouse gases through the sale of natural gas to Asian markets if the gas replaces more polluting methods of power production in those countries.

“But the goals that were set, and we supported them, were domestic,” Austin said.

Coleman now says the LNG tax plan will be released next February, the same time as the province begins formal budget deliberations.

And it will take the form of a tax on LNG output, the minister added.