Coherent Identifier About this item: 20.500.12592/hmwf53

A 2017 Update of Taxation of Oil Investments in Canada and the United States

2017

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Summary

BACKGROUND In 2012, The School of Public Policy published a study (Mintz and Chen, 2012) comparing the fiscal treatment and the overall tax burden on the upstream oil sector in Canada, the United States and four other oil-producing countries, using as a yardstick the marginal effective tax and royalty rate (METRR). [...] Against what was perhaps the public’s expectation that this review would result in higher royalties to be paid by the oil industry, the review panel actually concluded that the royalty system in Alberta was not under-taxing the industry, given the increased competition that Alberta oil faced from other jurisdictions, in particular the U. S. Thus, instead of increasing royalties, the review panel r [...] Figure 1 below summarizes our main findings for the current METRRs in Canada and the U. S. and the rates that would result under the two business reform plans currently under discussion in the U. S. Detailed results for the five Canadian provinces and five U. S. states considered are provided in the appendix. [...] The METRR in Canada has increased slightly from 27.7 per cent in 2016 (including the new royalty formulas for conventional oil in Alberta) to 28.0 per cent in 2017, primarily due to the change in the treatment of exploration expenses announced by the federal government. [...] The Canadian METRR is still considerably lower than the current METRR for oil in the U. S., but it is worth remembering that the low rate is in part due to the lower royalty rates payable in the largest two oil-producing provinces, Alberta and Saskatchewan, at the current depressed oil prices.

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government politics public finance united states economy taxation competitiveness government policy investments payments tax government budget taxes corporate income tax corporate income taxes income taxes corporate tax value-added tax business finance economy, business and finance carbon taxes price of oil government finances hst gst royalty payment income tax in the united states

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