BC Levels LNG Playing Field
Hoping to attract more than the Shell-led LNG Canada project in Kitimat, the BC provincial government on March 25 introduced legislation that brings together the final fiscal elements of the policy framework established in March 2018.
The legislation, which offers a natural gas tax credit for LNG developments in BC and repeals former Liberal party premier Christy Clark’s LNG Income Tax and other measures, is in addition to special provincial sales tax and electricity rate structures announced earlier by premier John Horgan’s NDP-led coalition government.
“British Columbians are counting on us to attract LNG investment that meets strict conditions: delivering jobs and financial benefits to BC, creating economic partnerships with indigenous peoples, and protecting our clean air, land and water,” BC finance minister Carole James said. “This legislation completes the process of creating a fiscal framework that invites investment while supporting those conditions.”
Effective January 1, 2020, the new natural gas tax credit will be available to qualifying corporations – not just LNG Canada – and is currently calculated at 3% of the cost of natural gas. The tax credit can be used to reduce BC’s corporate income tax rate to 9% from 12%.
Trades and business groups, local majors and First Nations all welcomed the legislation, saying it provided the province’s emerging LNG industry with a level playing field with other established industries, including no industry-specific tax and hydro rates that are the same as those paid by other industries.
“It is important for BC’s LNG projects to not face additional costs other LNG projects in development around the world do not pay, or BC risks losing new jobs and benefits and the opportunity to add value to our natural gas,” the BC LNG Alliance said in a statement.
But Horgan’s coalition partner, BC Green Party leader Andrew Weaver, called the tax credit a “generational sellout” and said its introduction – which he and his Green Party colleagues voted against in first reading – pulls the province in two different directions in its fight against climate change.
“Continuing to push for LNG development is short-sighted and works directly against CleanBC objectives,” Weaver said. “After years of criticising the BC Liberals for their generous giveaway of our natural gas resources, the BC NDP have taken the giveaway to a whole new level. The legislation brought forward by this government is a generational sellout.”
Bill 10, the legislation enabling the tax credit, easily passed first reading in the provincial legislature, with only the three Green Party MLAs voting against it. All 42 Liberal MLAs, 41 NDP MLAs and one independent MLA voted in favour.
“In minority governments, there are disagreements between partners,” Weaver said. “This is one of those. We will use our opportunities to speak to make our case to the 84 other legislators that LNG is the wrong path to pursue.”