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

Kitimat is one step closer to securing LNG plant

Horgan offers incentives, introducing a new approach toward LNG projects on the North Coast.

Australian company Woodside ends Grassy Point LNG project

Woodside and Chevron still committed to Kitimat LNG

UPDATE: Haisla Girls – 2018 Junior All-Native basketball tournament

Despite spirited performances Haisla girls lose two of their matches

Kitimat could get bicycle lanes in the future

This project will allow for cyclists no different than any other sidewalk in the community.

Diver airlifted following accident at navy shipwreck

The diver was kept in the chamber while the barge was towed to Hartley Bay

Vancouver Aquarium’s resident octopus released into ocean

Staff let the Giant Pacific octopus go into the waters near Bowen Island so she can reproduce

BCHL Today: Prince George avoids elimination with game five win

BCHL Today is a (near) daily look at what’s going on around the league and the junior A world.

Suspect arrested and charged for assault on autistic man

Parmvir Chahil has strong B.C. ties; two others charged with accessory after the fact

Uber self-driving crash video calls safety, rules into question

Experts say footage shows that vehicle’s sensors should have spotted pedestrian, initiated braking

Greens’ Elizabeth May, NDP’s Kennedy Stewart join B.C. anti-pipeline protest

The two politicians could be arrested for violating a court injunction

B.C. man shot by police in 2017 pleads guilty to string of offences

Kaymen Winter gets two years, opts for trial on two charges related to Salmon Arm car wash shooting

Are you going to turn off the lights for Earth Hour?

BC Hydro report says fewer people in the province are taking part, but feel it’s still important

Marijuana edibles won’t be regulated in 2018

Health Canada says edible regulation is still more than a year away

Fat joke on B.C. school’s sign not appropriate, woman says

Surrey mother says weight issues are no laughing matter

Most Read