See the sky is not falling. Instead the boys in the Petro Towers in Calgary are hearing the sounds of pennies from heaven falling into their laps.
Oilsands stocks rallied yesterday on a US$4.15 jump in crude prices and optimism that Ottawa's surprise corporate tax cut could rescue producers from Alberta's oil and gas royalty increases.As the old adage goes what the government taketh away the government gives to them that has.
Oilsands companies with long-term oilsands plans will be among the biggest beneficiaries of corporate tax changes proposed by Jim Flaherty, the Federal Finance Minister, on Tuesday, Andrew Potter, oil-and-gas analyst at UBS Securities Canada Inc., said in a research note.
The three most influential movers on the TSX were oilsands companies. EnCana Inc. jumped $2.96 to close at $66.10, Canadian Natural Resources Ltd. rose $3.46 to close at $78.56, and Suncor Energy Inc. was up $3.79 to close at $103.45. Crude prices jumped as high as US$94.74 a barrel, a record price when not adjusting for inflation, on a report showing that inventories in the United States are at a two-year low. Crude for December delivery closed at US$94.53, up US$4.15.
Personal income taxes are being positively impacted in two ways -- by cutting the lowest rate by a half-percentage point, and by raising the "basic personal amount" that someone can earn without paying any tax.
The two measures together will produce an average saving of about $275 a year for most working Canadians.
Better than nothing, but still less that the price of a Tim's coffee per day.
BIG BUSINESS WINS
Big corporations, on the other hand, are in for significant tax reductions over the next five years as the federal rate drops to 15% from more than 22% today.
By 2012, the total cost to the treasury of giving corporations such a break is expected to be just over $14 billion, or almost 50% more than all of Flaherty's tax cuts for individual Canadian taxpayers over the very same period of time.
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