|
|
Phase Out Subsidies to Oil and Gas Industry Recommendations for Budget 2006 Recommendation Background and Rationale22: Estimated federal expenditures to the oil and gas sector are $1.4 billion per year, based on the latest available data. Most of the subsidies are in the form of tax breaks under Canada’s Income Tax Act. In the period 1996-2002, these tax subsidies amounted to a staggering $8 billion. According to the Auditor General’s office, the fossil fuel sector has received more than $40 billion in federal subsides over the course of the last three decades. One particularly egregious subsidy is the accelerated capital cost allowance for tar sands developments. Capital cost allowance rates generally reflect the useful life of the assets being depreciated. Tar sands projects qualify for significantly accelerated write-offs resulting in a tax expenditure of $484 million between 1996 and 2002. These tax expenditures are likely to grow dramatically given the numerous multi-billion dollar tar sands projects that have recently been proposed. Since 1997 when Canada first agreed to its Kyoto target, the federal government has been spending $2 on oil and gas industry tax subsidies — and indirectly promoting greenhouse gas emissions — for every $1 it has spent on reaching its Kyoto goal. Between 1990 and 2003 Canada’s greenhouse gas emissions increased by 24%, with a significant part of the increase attributable to the oil and gas industry. The Green Budget Coalition believes that these government expenditures are not warranted to a sector experiencing record profits and that these financial resources can now be more effectively utilized to help drive the Canadian economy towards a sustainable energy future. Total savings Contacts: Marlo Reynolds 22. Most of this data can be found in: A. Taylor, M. Bramley, & M. Whitfield (31 January 2005): Government Spending on Canada’s Oil and gas Industry: Undermining Canada’s Kyoto Commitment. Pembina Institute. back to text |