Energy East Causing Uproar

[Accountability Now]

The premier said there would have to be all NEW pipeline, so how can one debate him?

I don't understand your question.

[Argus]

You want to talk about welfare? The biggest welfare recipients in this country are the fossil fuel companies.

That's not welfare that's fantasy. Edited March 3, 2016 by Argus

[dre]

The fossil fuels which pay for the welfare and health care the dreamers don't because they don't pay much, if any tax.

Pretty silly statement. Fossil fuels are a tiny percentage of GDP.

[Argus]

Pretty silly statement. Fossil fuels are a tiny percentage of GDP.

But a big part of government revenue.

[overthere]

But a big part of government revenue.

do yo know of any way that fact could be communicated to 24 Sussex.? I don't think they have gotten that news yet.

[ReeferMadness]

But a big part of government revenue.

do yo know of any way that fact could be communicated to 24 Sussex.? I don't think they have gotten that news yet.

You could send a letter but 24 Sussex is vacant for renovations at the moment.

And I suspect that the current tenants at Rideau Cottage might understand something that seems to elude both you and the previous occupants of 24 Sussex. And that is it's just plain dumb to focus primarily on a single volatile commodity group, particularly when the value of that commodity group has just crashed and may be worth even less over the long term, and particularly when most of the worlds climate scientists blame those commodities for a situation which may imperil civilization.

[TimG]

And that is it's just plain dumb to focus primarily on a single volatile commodity group, particularly when the value of that commodity group.

You keep using this argument but it is basically BS because it presumes that there is a choice between developing resources and developing other industries. No one advocating for pipelines has suggested this which makes your argument quite dishonest. A strong economy builds on multiple strengths and it is simply dumb to discard opportunities in one sector for no reason other than your personal distaste.

In addition, oil may be less valuable in the future but that is an argument for capturing its value now instead of waiting for the future.

Edited March 4, 2016 by TimG

[dre]

You keep using this argument but it is basically BS because it presumes that there is a choice between developing resources and developing other industries. No one advocating for pipelines has suggested this which makes your argument quite dishonest. A strong economy builds on multiple strengths and it is simply dumb to discard opportunities in one sector for no reason other than your personal distaste.

In addition, oil may be less valuable in the future but that is an argument for capturing its value now instead of waiting for the future.

But even with today's prices the tar sands are barely profitable and the industry is laying of thousands of workers. If prices don't go up, the industry will want another rescue/bailout like they got from the liberals in the mid nineties.

[TimG]

But even with today's prices the tar sands are barely profitable and the industry is laying of thousands of workers. If prices don't go up, the industry will want another rescue/bailout like they got from the liberals in the mid nineties.

What is this 'bailout'? I suspect you are referring the reduction in royalty payments which makes since royalties go to zero if companies go under. In any case, the current prices will kill new projects but projects where capital has already been invested can continue to produce. If prices don't recover the industry will die on its own and that is fair. Edited March 5, 2016 by TimG

[dre]

What is this 'bailout'? I suspect you are referring the reduction in royalty payments which makes since royalties go to zero if companies go under. In any case, the current prices will kill new projects but projects where capital has already been invested can continue to produce. If prices don't recover the industry will die on its own and that is fair.

I mean the 100% ACCA break given to insitu miners to rescue that industry in 1996. And it wont just die on its own... if the industry continues to falter the government will intervene. Too big to fail, and all that.

[TimG]

I mean the 100% ACCA break given to insitu miners to rescue that industry in 1996. And it wont just die on its own... if the industry continues to falter the government will intervene. Too big to fail, and all that.

That is not a bailout. It is not really even a subsidy. All it does is allow oil companies to write down their assets immediately which simply reduces taxes today but increases taxes later.

[dre]

That is not a bailout. It is not really even a subsidy. All it does is allow oil companies to write down their assets immediately which simply reduces taxes today but increases taxes later.

It IS a bailout. It cost the taxpayer an estimated 538 million between 1996 and 2007, and escalated after that to over 300 million per year.

[TimG]

It IS a bailout. It cost the taxpayer an estimated 538 million between 1996 and 2007, and escalated after that to over 300 million per year.

You need to learn the difference between tax deferrals and tax credits. Tax *deferrals* are not losses to the tax payer. They are delayed collections. It certainly is not a bailout. Bombardier and GM would still go bankrupt if all the government did is offer tax deferrals. Bailouts are direct cash transfers to a corporation.

Furthermore, these tax deferrals of <500 million per year are significantly smaller than the direct royalty revenue collected by the Alberta government which means that fossil fuels are a net income generator even if one accepts your ridiculous notion that tax deferrals should be called subsidies.

[dre]

You need to learn the difference between tax deferrals and tax credits. Tax *deferrals* are not losses to the tax payer. They are delayed collections. It certainly is not a bailout. Bombardier and GM would still go bankrupt if all the government did is offer tax deferrals. Bailouts are direct cash transfers to a corporation.

Furthermore, these tax deferrals of <500 million per year are significantly smaller than the direct royalty revenue collected by the Alberta government which means that fossil fuels are a net income generator even if one accepts your ridiculous notion that tax deferrals should be called subsidies.

They ARE a subsidy in the same way interest free loans are. They allow companies to take on less debt and pay less interest. They are a preferential treatment not given equally to all other industries, that's why Harper phased them out. And I never said FF's were not an income generator so not sure what you're talking about there.

I would LOVE it if my company could capitalize 100% of its equipment purchases in the year that I bought stuff instead of depreciating it gradually throughout its life-time.

Edited March 5, 2016 by dre

[TimG]

They ARE a subsidy in the same way interest free loans are.

No they are not because tax deferrals only have value to corporations that are actually making a profit. Moreover all of benefit comes from the company's own revenue streams and does not come from tax payers.

They are a preferential treatment not given equally to all other industries, that's why Harper phased them out. And I never said FF's were not an income generator so not sure what you're talking about there.

Your responded to a thread and you should read the context. IN this case the context was my statement that fossil fuels received small subsidizes that were directly connected to their ability to generate revenue for government so the fact that the benefit is less that the royalties proves my point. The intent was to contrast with stuff like wind power where the government will never make money back from any subsidies nor will they be able generate revenue by taxing sales to consumers like they do with fossil fuels.

I would LOVE it if my company could capitalize 100% of its equipment purchases in the year that I bought stuff instead of depreciating it gradually throughout its life-time.

In the long term that would just mean you save taxes today but pay more tomorrow. It is a cash flow benefit - nothing else. Edited March 5, 2016 by TimG

[dre]

No they are not because tax deferrals only have value to corporations that are actually making a profit. Moreover all of benefit comes from the company's own revenue streams and does not come from tax payers.

Wrong. The government collected almost a billion dollars less in taxes than it would have collected from other industries making the same profit. And since it was running a deficit that's a billion dollars extra they are now paying interest on. The company in the mean time was able to spend more money on other investments.

Your responded to a thread and you should read the context. IN this case the context was my statement that fossil fuels received small subsidizes that were directly connected to their ability to generate revenue for government so the fact that the benefit is less that the royalties proves my point.

YOU should read the context. YOU replied to my post which said the government would help the industry if they got into trouble.

In the long term that would just mean you save taxes today but pay more tomorrow. It is a cash flow benefit - nothing else.

Right. A benefit not give to other businesses.

[Wilber]

Wrong. The government collected almost a billion dollars less in taxes than it would have collected from other industries making the same profit. And since it was running a deficit that's a billion dollars extra they are now paying interest on. The company in the mean time was able to spend more money on other investments.

What other industries?

[Wilber]

And that is it's just plain dumb to focus primarily on a single volatile commodity group, particularly when the value of that commodity group has just crashed and may be worth even less over the long term, and particularly when most of the worlds climate scientists blame those commodities for a situation which may imperil civilization.

Even dumber to ignore it.

[ReeferMadness]

Even dumber to ignore it.

When you're driving do you look ahead or behind you?

[TimG]

When you're driving do you look ahead or behind you?

The only person who is saying it has to one or the other is you. This line of argument is a BS narrative you dreamed up to rationalize your own ideologically driven hatred of resource industries. We can have a healthy resource sector while developing other industries. Edited March 6, 2016 by TimG

[msj]

You need to learn the difference between tax deferrals and tax credits. Tax *deferrals* are not losses to the tax payer. They are delayed collections. .

You need to learn the time value of money.

Yes, I know in a world of negative interest rates it seems like it doesn't matter. But it does and it will.

[TimG]

You need to learn the time value of money.

The presumption built into any 'letting someone keep their money is a subsidy' argument is that the government right to all income any amount that the government lets you keep is a 'subsidy'. I reject the premise. A tax benefit is a tax benefit that comes from the income of the person or company receiving it. It is materially different from a subsidy which comes from tax payer funds.

If you want to argue a benefit based on treatment of other companies that buy exactly the same type of assets then that benefit would only be reasonable interest on the deferred taxes. If is simply dishonest to say the entire CCA deduction is a 'subsidy'.

Lastly, there is a lot of arbitrariness built into the extremely general CCA classes which means no industry is treated exactly like every other industry when it comes to the CCA rates that apply to the capital goods that they need to purchase.

Edited March 6, 2016 by TimG

[msj]

Never claimed the CCA deduction is a subsidy.

But clearly the extent that the CCA rate is accelerated as compared to the true economic depreciation of an asset then the time value of money comes into play.

The extent that governments play their little games with this is a handout to businesses as we understand the time value of money so we love getting this kind of tax break.

It's is thanks to people like type who excuse this type of thing that allows for this type of handout to continue in perpetuity.

And perpetuity is the best kind of benefit when it comes to the time value of money.....

[TimG]

Never claimed the CCA deduction is a subsidy.

OK. I agree that artificially accelerated CCA is a tax benefit with a value based on a reasonable interest rate. My argument was against the suggestion that it was a subsidy and the value of the subsidy is equal to the amount of the deduction.

The extent that governments play their little games with this is a handout to businesses as we understand the time value of money so we love getting this kind of tax break.

For a business the fact that capital goods cannot be deducted in the year the money was spent means capital goods are taxed at the corporate rate. These taxes will be returned over several years but it still increases the amount the company has to spend upfront which has the effect of discouraging capital investment which is generally a bad thing. Edited March 6, 2016 by TimG

[msj]

1) IOW you did not know what you were arguing....

2) businesses borrow money, pay and deduct interest, and expense the value of the asset of the assets' useful life. While we cannot expect this to be perfect as it requires estimates as to how the asset is used, the economic reality remains: why should a business get an accelerated write off?

Inventory is a good example given how quickly it can turn over.

Are we to presume that it's fine for Walmart to just expense all of its inventory upon being purchased and they somehow deserve this write off because they have already paid for it?

Even though the value of the inventory is exceeded by the value of their trade payables?