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

Update: Wildfire south of Anahim Lake 50 per cent contained

The estimated size of the fire, as of Sunday evening was 71 hectares

Column: Trump trade wars and food security

Should Canada keep a handle on its food products? Columnist David Zirnhelt discusses

Billy Barker Days Society gets set for 44th annual festival

Quesnel’s unique summer festival is back

Annual Quesnel motorcycle charity run gives back to riders

In the past, the run has raised money for Dreams for Kids, the Special Olympics and the SPCA

Moms of those killed by illicit opioids take to B.C. Legislature in call for action

Moms Stop the Harm, a nationwide network of families who have lost loved ones to overdoses rally

Pigs crash yoga class in B.C.

First it was goats, now it’s pigs — you can get downward dog with the whole farm in Aldergrove

Judge dismisses DNA request in Cranbrook triple murder case

Dean Christopher Roberts must appeal directly to the federal Minister of Justice, reads ruling.

Yes, we could use a soft drink tax

NDP rejects useful tax advice because it’s not popular

Canada sweeps China in Pacific Rim Basketball Classic

National men’s team beats China twice over weekend in Vancouver and Victoria

Closing arguments expected in trial for twice convicted Canadian killer

Crown, defence expected to give closing arguments in Millard murder trial

Canadians undertake the world’s most dangerous peacekeeping mission

A dozen Canadian peacekeepers arrive in Mali as yearlong mission begins

U.S. justices won’t hear case of anti-gay marriage florist

The case is regarding whether business owners can refuse on religious grounds to comply with anti-discrimination laws

Kangaroo stops play during Australian soccer match

The women’s game stopped play for more than 30 minutes on Monday due to the kangaroo

Most Read