Ottawa’s budget changes hurt Alberta’s oil and gas sector
Tax changes put forward in the federal budget are another kick in the teeth to Alberta’s oil and gas sector and Alberta should fight against it, Wildrose Leader Brian Jean said today.
Oil-and-gas companies will now see a tax hike with changes to the Canadian Exploration Expense (CEE). Previously, the CEE allowed the write off of exploration costs for wells drilled in the year the expenses were paid, but now the expenses will be written down at a rate of 30 per cent per year on a declining basis.
The Canadian Association of Petroleum Producers president and CEO Tim McMillian called the move disappointing as “it sends a bad signal and further puts us at a disadvantage in terms of the capital we are trying to attract from global markets.”
“Yesterday, Premier Notley called the federal budget good news for Alberta, but it needlessly took a shot at our energy sector at a time when we are still reeling from the economic downturn,” Jean said. “Our government should be demanding an immediate reversal of these changes so we can protect jobs across our oil and gas sector.”
Capital liquidity is extremely important during the early stages of exploration when nothing is guaranteed for an investor. The former taxation structure allowed companies to facilitate the raising of equity to fund exploration, which is essential to bringing back jobs to the energy sector.
Jean said that with the U.S. committed to no carbon taxes and working towards major reductions to business taxes, this move is just the latest in hurting our ability to compete.
“On top of the carbon tax and other tax increases, this move will without question continue to have a negative impact on small oil and gas producers across Alberta,” Jean said. “We need to be attracting jobs and investment, not driving them away.”