The new royalty framework announced today will boost overall royalties by $1.4 billion or 20 per cent in 2010. But Stelmach has rejected a call to impose an oilsands severance tax that established producers would have had to begin paying next year.
The new rates, which will hike royalties from current highs of 35 per cent to a maximum 50 per cent for conventional oil and natural gas, won't take effect until 2009.Under the new framework, which will take effect on Jan. 1, 2009, the government projects it will squeeze $1.4-billion more from the oil and gas sector, with most of the increases coming from the oilsands.
The government take from oilsands projects will increase from the current 1% before project payout, to a range of 1% to 9%, depending on oil prices.
When investment is recovered, projects will see royalty increases from the current 25% to a range of 25% to 40%, depending on oil prices. At current oil prices, that translates into a government take of about 65% of net revenue, up from the current 47%.
The new framework will boost government take for natural gas from 58% today to 60%, rather than 63% recommended by the panel; for conventional oil, government take goes up 5% to 49%, which is what the panel proposed; for oilsands, government share increases to between 57% and 66%, when the panel was recommending an increase of 64%.
What Big Oil pays in royalties is a mere $2.2 billion more than what the government brings in from you and I.
Energy royalties and taxes are vital to the Alberta government's Canada-leading wealth. They brought in $9.8 billion last year, compared to only $7.6 billion in personal income taxes.
Auditor General Fred Dunn bolstered the case for higher royalties earlier this month, when he revealed that the government has ignored its own conclusions since 2004 that it could reap $1 billion more a year without damaging oil and gas companies' business prospects.
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