There's a better way to solve Alberta's financial woes than hiking royalties and taxes in the oil patch

Janice Buckingham

May 19, 2015

Yadullah Hussain, Financial Post, National Post

(Recap)

Rachel Notley’s New Democratic Party brought the Progressive Conservatives’ near-44-year rule in Alberta to an abrupt end with a platform that pledged to raise corporate taxes, review oil and gas royalties and cut greenhouse gas emissions.

But rather than tinkering with royalty rates and corporate taxes, some analysts say the new government should train its sights on bolstering the province’s carbon pricing structure, a move that may offset some of the need for tax increases and repair the province’s reputation as a carbon-polluter.

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“When there is uncertainty in a regulatory regime, there is greater risk that capital will either stall or even start to flow out of that regime rather than into it,” said Janice Buckingham, Calgary-based partner at Osler, Hoskin & Harcourt LLP.

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If Notley wants to implement a competitive royalty regime that escalates royalties as prices rise, “it’s fair to say, the province has that,” Buckingham noted.

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Royalty rates hardly paint a complete picture of a jurisdiction’s competitiveness.

“The important point from [the Alberta] industry’s perspective is to look at the entirety of the economic rent that’s charged by government to producers,” Buckingham said.

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