Province to announce today how much it will tax LNG projects

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VANCOUVER (NEWS1130) – Premier Christy Clark has been banking on the liquefied natural gas sector to power the economy, and bring in billions of dollars and thousands of new jobs.

The provincial government is set to reveal today how much it will tax LNG projects.

There is a report that BC has sweetened the deal. It says the province will announce a lower-than-expected tax rate on profits from LNG exports.

In this case, not just investors: the Wall Street Journal reports the BC government will introduce tax rates that are lower than what was unveiled earlier this year. It cites a single source familiar with the deliberations.

In February, Victoria made a provisional two-tiered proposal for a 1.5 per cent tax that rises to seven per cent after the capital investment is paid off.

Key details have been unclear, causing Malaysia’s Petronas to threaten not to go ahead for a decade or more.

BC Finance Minister Mike De Jong has said this tax needs to be balanced. “But the basic principle around ensuring there is a balance between being competitive on the one hand, but deriving a fair return for the owners of the resource, British Columbians will reveal itself.”

“The basic principles are, as I indicated, a two-tiered tax that recognizes there are significant capital investments that are being made,” he adds.

The details will give these companies the information they need to decide whether it’s worth investing billions of dollars.

This comes after concerns raised by the LNG Alliance that the time for the industry to be developed is passing, as well as concerns about the industry’s global competitiveness. The president says it recognizes British Columbians deserve to get a fair return and developers need a fair return to invest.

The new legislation is expected to be passed by the end of November.

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