The British Columbia government led by Premier John Horgan (pictured above) has announced a new fiscal framework for natural gas development in B.C. The new framework forms the basis for the B.C. government’s discussions with LNG Canada, which is moving toward a final investment decision on a project that, if approved, would be the largest private sector investment in B.C. history. The government estimates the project would create 10,000 construction and up to 950 full-time jobs. Direct government revenues under the framework are estimated to be $22 billion over 40 years.
The new fiscal framework will help put natural gas development in the province on a level playing field with other industrial sectors, removing certain discriminatory elements that would have placed an unfair cost burden on the industry. Key elements of the new fiscal framework include:
- The elimination of the LNG income tax that had required LNG-specific tax rates that other industries do not have to pay;
- Relief from provincial sales tax (PST), in line with the policy for manufacturing sectors: this relief is subject to repayment in the form of an equivalent operational payment;
- The removal of a discriminatory electricity tariff that was 40 per cent higher than rates paid by other industrial users in B.C..
- New GHG emission standards under the Clean Growth Incentive Program, announced in Budget 2018.
