A critical look at BC’s new tax breaks and subsidies for LNG
There are four major measures or concessions made by the BC government in the LNG Canada Agreement:
- Discounted electricity prices: Through BC Hydro, LNG Canada’s facility will pay the much lower industrial rate for electricity used in production. The value of this subsidy is be-tween $32 million and $59 million per year
- Exemptions from increases in the BC carbon tax: Any BC carbon tax above $30 per tonne of CO2 will be rebated for approved facilities that meet a greenhouse gas intensity bench-mark. As the tax will be $50 per tonne by the time the facility opens, this tax break is worth $62 million per year.
- A corporate income tax break: A natural gas credit against corporate income tax has been created with the intent of lowering tax from the regular rate of 12 per cent to 9 per cent. Prevailing LNG prices suggest that very little income tax is likely to be declared in BC so it is difficult to estimate the value of this tax break.
- Deferral of provincial sales tax on construction: This measure is essentially an interest-free loan that does not have to be repaid for more than two decades. On an annual basis, this break is worth $17–21 million.