Graph shows all provincial taxes as they would apply to a medium-sized facility producing 12 million tonnes of LNG per year

LNG tax drops in softer gas market

B.C. government scales down tax plan as Asian gas market slows down, Russia sells to China and oil prices decline

VICTORIA – Liquefied natural gas producers are being asked to pay a new tax of 3.5 per cent on their profits for the first 20 years of operation in B.C., after deducting their startup costs.

Finance Minister Mike de Jong unveiled the LNG tax system Tuesday, describing it as lower in total taxes and royalties than existing and proposed LNG export facilities in Australia, Alaska, Oregon and other U.S. states that are B.C.’s main competitors.

De Jong said B.C. scaled back its plan to charge up to seven per cent in the face of declining gas market conditions, including slower growth in China and its new long-term deal to buy pipeline gas from Russia. Japan is also considering restarting its nuclear power program after the 2011 Fukushima earthquake, and oil prices have declined in recent months.

Under the B.C. plan, a single medium-sized LNG plant on the B.C. coast would pay about $800 million a year in total provincial taxes after a three-year construction period. That includes the new LNG tax, royalties on gas produced in B.C., carbon tax, provincial sales tax and corporate income tax.

“That’s more than we got from the whole forest sector this year,” de Jong said.

There are currently 18 proposals for LNG plants in B.C., ranging from small to those twice the size of the finance ministry’s medium-plant example. One of the largest is LNG Canada, a consortium of Shell, PetroChina, Mitsubishi and Korea Gas to build a pipeline and export terminal at Kitimat.

LNG Canada issued a statement Tuesday saying it will continue to work on its B.C. plan.

“There is much more work to do prior to a final investment decision for LNG Canada and we will continue working with First Nations and local communities, as well as municipal, provincial and federal governments,” it said.

De Jong said the B.C. Liberal election promise to pay off the province’s debt with LNG revenues remains possible, but it will take longer than earlier estimates. A single medium-sized is worth $8 billion in revenues over a 10-year period of full operation.

NDP natural gas critic Bruce Ralston said the government had to slash its tax plan after it hyped the LNG revenue windfall to voters in the 2013 election campaign. That put B.C. in a weaker negotiating position with international investors, Ralston said.

The new tax takes effect in 2017, with an effective rate of 1.5 per cent for three years as companies construct LNG plants. Only one or two small facilities are expected to be ready by then. The rate rises to 3.5 per cent on net income after capital costs are deducted, and to five per cent effective 2037.

Just Posted

Ticket prices going up for Agassiz bylaw infractions

Early fee payments will now see a 20 per cent discount, but most fees still higher

Short term rentals now allowed in Agassiz

Kent council approved bylaw changes to allow AirBnBs after a second public hearing

Agassiz, Harrison organizations receive more than $140K in gaming grants

Grants will go to support local sports, arts groups for the 2019-20 fiscal year

Brother of Chilliwack homicide victim killed in Surrey on Remembrance Day

Andrew Baldwin shot on Nov. 11, three weeks after Keith Baldwin shot in downtown Chilliwack

Volunteer organization provides first aid and rescue services

Main fundraiser, the Winter Extreme Ski and Board Swap, takes place at Abbotsford Exhibition Park Nov. 16 and 17

VIDEO: Agassiz, Harrison honour Remembrance Day

The annual ceremony took place at AESS, followed by a moment of silence at the Agassiz cenotaph

Seguin lifts surging Stars to 4-2 win over Canucks

Dallas is 6-0-1 in last seven outings

UPDATE: Metro Vancouver bus drivers to refuse overtime as transit strike escalates

Overtime ban could disrupt 10-15 per cent of bus service in Metro Vancouver

‘City that protects rapists’: Sexual assault survivor slams Kelowna mayor for defending RCMP

Heather Friesen spent the morning handing out flyers around city hall calling out the mayor

South Surrey man and city settle beef over backyard cow

Asad Syed, who kept a calf on his property last year, met City of Surrey in court Tuesday

Batten down the hatches: Wet and windy weekend on the way for coastal B.C.

Environment Canada issues special weather warning for Lower Mainland, Vancouver Island

BC Liquor Stores to move fully to paper bags by March

Vancouver Island to be the first to convert to paper bags in November

Tolko shuts B.C. divisions for two weeks over holidays

Head office to close from Dec. 23-27; two weeks’ downtime runs Dec. 21-Jan. 6

B.C. government working with RCMP to address $10 million in budget cuts

Public Safety Minister Mike Farnworth issues statement following report of RCMP cost-cutting

Most Read