Analysis reveals $1B boost in government revenue, minor impacts on
To view the Social Media Release, click here: http://smr.newswire.ca/en/the-school-of-public-policy-at-the-university-of-calgary/albert-oil-sands-new-royalty-framework
CALGARY, Sept. 15, 2011 /CNW/ - In a study released today by The School
of Public Policy, Professor Ken McKenzie examines how Alberta's oil
sands have been affected by the controversial New Royalty Framework.
Using economic data, McKenzie finds "incremental revenue for the
government of Alberta over the last two years in excess of $1 billion."
"This has been done without generating the political outcry that
accompanied much of the changes to conventional oil and gas as a part
of the royalty review process," McKenzie writes. The reason that oil
sands producers have not met the new royalty rates with much opposition
lies in the structure of the royalty system for that particular sector.
The oil sands royalty "allows for the deduction of operating and capital
costs, thus the government shares equally in both the revenues and
costs of oil sands projects," he writes. This creates a system where
the net impact on producers is only a fraction of the increase in
As such, McKenzie argues investment in the oil sands is expected to
shrink only slightly, while the increase in government revenue is
So where does that leave conventional oil and gas producers who
vehemently opposed the royalty changes in 2009?
The oil sands example proves "we can pluck the goose that lays the
golden eggs without killing it," McKenzie writes. "The structure of the
system —the base upon which the tax or royalty is applied - is at least
as important as the rates. This lesson may well be applied to royalties
in the conventional oil and gas sector."
The study can be found by going to policyschool.ca/publications.
Video with caption: "Video: Changes to royalty rates for oil sands a success". Video available at: http://stream1.newswire.ca/cgi-bin/playback.cgi?file=20110915_C3788_VIDEO_EN_3343.mp4&posterurl=http://photos.newswire.ca/images/20110915_C3788_PHOTO_EN_3343.jpg&clientName=University%20of%20Calgary%20%26%23150%3B%20School%20of%20Public%20Policy&caption=Video%3A%20Changes%20to%20royalty%20rates%20for%20oil%20sands%20a%20success&title=Changes%20to%20royalty%20rates%20for%20oil%20sands%20a%20success
SOURCE University of Calgary - School of Public Policy
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