Prime Minister Stephen Harper was in B.C. this week, announcing the federal government’s intention to promote LNG projects in B.C. through changes to the tax system. The BC Chamber and the Canadian Chamber of Commerce highlighted the importance of this tax policy change in a recent letters to the Minister of Finance Joe Oliver.
LNG capital assets acquired between now and 2025 will be subject to a capital cost allowance rate of 30 per cent for equipment, and 10 per cent for buildings. That will allow allowing LNG proponents who invest in British Columbia to deduct a higher share of capital costs. Equipment is currently subject to an eight per cent rate, and buildings are subject to a six per cent rate.
The change is designed to help companies move forward with developments at a time when a number of energy companies have reduced capital investment in response to plummeting oil prices. Prime Minister Harper said the incentives will provide the right conditions for the LNG industry to succeed and compete in the global economy while encouraging job growth.
B.C. Premier Christy Clark said the change will make B.C. a more attractive jurisdiction to invest for LNG proponents. She said B.C. is already more competitive than Australia; these incentives will help increase B.C.’s position against competition from the U.S., specifically Washington, California and Oregon.
The federal government anticipates the move will reduce corporate tax revenue by ‘less than $50-million’ over the next five years.