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BC's oil and gas industry gets tax break at the pump, in the field

Tax exemptions and royalty breaks for British Columbia's oil and gas industry is going to hinder the provincial government's goal to reduce greenhouse gas emissions, according to the B.C. Sustainable Energy Association (BCSEA).

Premier Gordon Campbell introduced plans for a harmonized sales tax (HST) last month. The tax will combine the five per cent provincial sales tax with the seven per cent federal sales tax. But some products -- including gasoline and diesel fuel -- are exempt from the provincial sales tax portion of the new HST.

While reducing taxes at the pump, the province has also slashed the royalty rates that oil and gas producers must pay at the source. According to some reports, it's a bid to woo the natural gas industry away from Alberta at a time when prices have reached a seven-year low. Wells drilled between September and June of 2010 will be subject to a two per cent royalty rate, instead of the typical 20 per cent rate, for one year.

"When the government is taking financial measures to provide incentives to the fossil fuel industry, we think that's going in the wrong direction," said BCSEA vice-president of policy Tom Hackney. BCSEA president Guy Dauncey, who wrote an editorial in the Georgia Straight this week on the HST, said the move puts the government in a contradictory situation.

"The deficit...has put government staff on panic stations all around, and it's about 'how do we save money,'" said Dauncey. "But it makes the province beholden to the fossil fuel industry by giving it tax relief...and it puts the government in a contradictory situation with it's GHG [greenhouse gas] emission goals."

Colleen Kimmett reports for The Tyee.

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