Quote:
Originally Posted by Codes
I think we all knew this already, but a report from the Parkland Institute has concluded that Albertans are being "short changed", if you will, on royalties from the tar sands. We have received less than 20% of the wealth generated from the oil sands, and since 1997, closer to 9%. If the target of 35% mandated in 1970 was met, Alberta would have made an additional $195 billion between 1971 and 2010.
I understand why the government cut royalties, to attract and spur production, but now that the tar sands are a major source of oil, do you think it is time to modify the royalty regime to generate more revenue for the province?
http://thetyee.ca/News/2012/04/05/Lo...ampaign=050412 |
Somewhat thought-provoking article, but it doesn't provide enough information to provide a clear answer. For starters, if we upped the government slice of the pie to 35%, does that $195B account for the pie getting smaller? Furthermore, the oil sands does much for Alberta than provide government revenue (I think we all know this). If we raise royalties, is that offset by losses to citizens, coporate tax, income tax, property tax etc.?
There are possible reasons why we should perhaps take a smaller piece than other jurisdictions. For example, if costs are higher here (and I believe they may be) then we need lower royalties to offset that and make us competitive.
To me, the figure that should be benchmarked is royalties as a percentage of
return on investment, because that's what drives investment decisions. You could say that we she be comparable in that compared to other jurisdictions, perhaps higher because we offer a relatively safe investment climate (compared to, say, certain Middle Eastern countries). But even then, if you base your rates based on that you're still kind of assuming that the market has it right, and it may not.