Ottawa to get more from oil taxes than Alberta.

[shoop]

According to the Canadian Energy Research Institute - Ottawa shoud take in $51 billion from the oilsands over the next twenty years as opposed to Alberta's $43.7 billion.

http://www.canada.com/edmonton/edmontonjou...0e-b8643ac6d3c0

Guess the Feds are getting more than half the tax revenue the way things are now. No need to grab for more....

[Riverwind]

Guess the Feds are getting more than half the tax revenue the way things are now. No need to grab for more....

As they say: there are lies, damned lied and statistics.

The study quoted in the article calculates the federal share by calculating tax generated by economic activity related to the oil sands, however, it does not take into account that much of this economic activity would occur anyways in other sectors or places. In other words, the $51 billion is not all additional revenue to the feds - most of it revenue that the feds would collect even if the oils sands did not exist or if oil dropped back to $20/barrel.

Furthermore, the study does not take into account the loss of federal tax revenue from manufacturing related activity caused by the artificially high 'petrobuck'.

In short, the only real winner is the Government of Alberta which gets billions of 'new' money from the royalities.

[shoop]

The study quoted in the article calculates the federal share by calculating tax generated by economic activity related to the oil sands, however, it does not take into account that much of this economic activity would occur anyways in other sectors or places.

Furthermore, the study does not take into account the loss of federal tax revenue from manufacturing related activity caused by the artificially high 'petrobuck'.

In short, the only real winner is the Government of Alberta which gets billions of 'new' money from the royalities.

<{POST_SNAPBACK}>

Hmmm, arguing about the premise of the study without any support of your own. After looking at the study, please give some example of the activity that would take place anyways.

Your knee-jerk leftie analysis is totally off on the petrobuck. The strengthen of the dollar in the immediate short-term (i.e. up and down since Katrina) has taken place in spite of mixed results for the price of oil. A stronger dollar is better for the entire country. When we sell our goods abroad we are getting more money for them. Hmmm, good thing. Canadian manufacturers are forced to find more efficiencies and cost-savings which make them that much more profitable when the dollar returns to historical averages. Hmmm, good thing.

Please actually explain how the Government of Alberta is the only one that gets 'new' money from the royalties. With highrer incomes and a higher level of economic activity there is an increased flow of income tax to the federal coffers. This income wouldn't be increasing if the price of oil weren't rising.

Ohhh yeah, you forgot to mention that Ottawa also directly gets a small percentage of the royalties from oil production. Hmmm, maybe it is good for the entire country after all...

[Riverwind]

please give some example of the activity that would take place anyways.

People and capital always find something to do. If there was no easy money in the oil sands then they would do something else that would create economic activity that could be taxed. The other activities would not necessarily generate the same amount of revenues but it does mean the $51 billion from oil sands figure quoted in the article is a red herring that only serves to misinform people.

Hmmm, good thing. Canadian manufacturers are forced to find more efficiencies and cost-savings which make them that much more profitable when the dollar returns to historical averages. Hmmm, good thing.

Many manufacturers will simply shift production overseas to get the necessary efficiencies. Those jobs would not come back even if the dollar returns to 'historical averages' (whatever that means). The high dollar does not only hurt manufacturing - it hurts virtually every non-resource sector that creates wealth for Canadians from tourism to software design. In the end, Canada will be much poorer if all the value added high skilled service industries are replaced by blue collar jobs in resource extraction industries - but that is exactly what will happen if current trends continue.

The only people who benefit from a high dollar are importers who get a temporary boost from sales until they discover that their customers can't afford to buy their products anymore because they don't own shares in resource companies.

Countries such as Norway may do reasonably well with high currencies due to oil revenues, however, these countries have mechanisms to ensure that the income is distributed fairly through the entire country instead of showering a select few with most of the benefits. That is my primary beef with the article - it made it sound like the feds (and the rest of the country) would get the majority of the benefits from oils sands. That is false - the vast majority of benefits will go to Alberta and the majority of costs will be paid by the rest of the country.

That said, I agree with the article's premise that some of the benefits will flow to the rest of the country through income taxation and other means.

[shoop]

That is false - the vast majority of benefits will go to Alberta and the majority of costs will be paid by the rest of the country.

That said, I agree with the article's premise that some of the benefits will flow to the rest of the country through income taxation and other means.

<{POST_SNAPBACK}>

What exactly are the costs you are referring to? Are you talking about the "costs" of a high dollar?

The article, and the study it reports on, doesn't even touch on the equalization payments that Alberta pays into C.A.P.

[Riverwind]

What exactly are the costs you are referring to? Are you talking about the "costs" of a high dollar?

High dollar and high energy - these are real costs and should not be dismissed.

[shoop]

High dollar and high energy - these are real costs and should not be dismissed.

<{POST_SNAPBACK}>

Already dealt with the high dollar.

High energy, hmmm....

We are a trading nation. That means respecting the world price of commodities. Whether or not it hurts Ontario in the short-term, because in the long-term it also hurts Ontario.

If the Feds were to try and artifically suppress the price of oil in Canada, a la a new NEP, it would be bad for Ontario. Never mind the catastrophic effect on Alberta, and serious damage done to the economies of Newfoundland and Saskatchewan.

Here is why it would be bad for Ontario in the long-term. Subsidizing the price of oil, would allow inefficient companies to survive when they wouldn't in a free market. This provides an unfair drag on the Canadian economy and is not sustainable in the long run. Additionally, foreign investors would lose confidence in a Canada that shows such blatant disregard for international trade rules (don't even talk to me about softwood, nuf said that Canada can't throw it's weight around like those jerk Republicans do when they are running the show in the U.S.) To attract foreign investment the Bank of Canada would have to raise the prime interest rate ... which would hurt ALL Canadian businesses.

Don't believe me? 23 years or so ago is a textbook example of how protectionism would hurt all of Canada.

[Riverwind]

Don't believe me? 23 years or so ago is a textbook example of how protectionism would hurt all of Canada.

I agree 100%. I am not advocating anything that resembles NEP II. Nor am I really advocating a massive transfer of funds from Alberta oil to the feds. All I would really want to see is a little a construtive humility on the part of Albertans and some recognition that rest of the country will be going through some difficult times while Albertans are spending their gov't rebate checks. It is time to tone down the rhetoric.

[shoop]

I agree 100%. I am not advocating anything that resembles NEP II. Nor am I really advocating a massive transfer of funds from Alberta oil to the feds. All I would really want to see is a little a construtive humility on the part of Albertans and some recognition that rest of the country will be going through some difficult times while Albertans are spending their gov't rebate checks. It is time to tone down the rhetoric.

<{POST_SNAPBACK}>

Completely agreed on the need to tone down the rhetoric. I think you need to understand the hatred that grew in Alberta because of the NEP. Klein is using that simmering anger for personal gain.

I honestly don't think a cheque is the best use for the money. I personally would have favoured using it to build a high speed rail link between Calgary and Edmonton. If people could do that trip downtown to downtown in an hour and a half or so, it would be great for the economy.

Don't really know what I will do with my cheque. An extra student loan payment perhaps? Pay my health care premiums for the year? Nothing extravagant...

[B. Max]

The high dollar does not only hurt manufacturing - it hurts virtually every non-resource sector that creates wealth for Canadians from tourism to software design. In the end, Canada will be much poorer if all the value added high skilled service industries are replaced by blue collar jobs in resource extraction industries - but that is exactly what will happen if current trends continue.

Well that's simply not true. What wealth is created by 8.00 dollar an hour tourism jobs as opposed to 20.00 to 35.00 dollar an hour resourse jobs. Those investment dollars that you think would be invested somewhere else if not in resources would be invested out side the country, and software jobs are being shipped overseas. At least resource jobs can't be shipped out of the country. This is a resource country and we need to make the most of what we have. I don't think you have a good understanding of what all goes into the oil patch or other resource industries to make them work. This is where the entire country benefits. The equipment and supplies are endless and encompass just about everything one can imagine. Currently we import a huge amount of manufactured goods from the US where we buy them with a low dollar because they aren't made in this country. The opportunities are there and opportunities mean jobs, but you have know what the customer wants. Those that have are doing fine and will continue to. Nonsense like kyoto and the belief in a free ride or a society of entitlements will make the country poorer.

[Yodeler]

Currently we import a huge amount of manufactured goods from the US  where we buy them with a low dollar because they aren't made in this country.

<{POST_SNAPBACK}>

Think you could get them cheaper if they WERE made in Canada?

Not on your life!

[B. Max]

Currently we import a huge amount of manufactured goods from the US  where we buy them with a low dollar because they aren't made in this country.

<{POST_SNAPBACK}>

Think you could get them cheaper if they WERE made in Canada?

Not on your life!

<{POST_SNAPBACK}>

I didn't say that. However resource industries do buy a lot of stuff that is made in the country. Specialized and non specialized pipe which the oil patch consumes like candy is made in this country. Specialized parts of a wells christmas tree are not made in the country just as huge electronic electrical panels are not made in the country. Just for some examples.

[Yodeler]

Currently we import a huge amount of manufactured goods from the US  where we buy them with a low dollar because they aren't made in this country.

<{POST_SNAPBACK}>

Think you could get them cheaper if they WERE made in Canada?

Not on your life!

<{POST_SNAPBACK}>

I didn't say that. However resource industries do buy a lot of stuff that is made in the country. Specialized and non specialized pipe which the oil patch consumes like candy is made in this country. Specialized parts of a wells christmas tree are not made in the country just as huge electronic electrical panels are not made in the country. Just for some examples.

<{POST_SNAPBACK}>

Sure they do buy a lot of stuff that is made here! But only if they can't buy it cheaper anywhere else.

I'm always amused when Christmas comes and over half of British Columbians end up with a tree from Oregon or Washington.