Back in the mid-1990s when the National Oil Sands Task Force (NOSTF) developing a new fiscal framework, the federal corporate tax rate, including large corporation surtax, 29.12% and the provincial corporate tax rate was 15.5%.
According to 2007 Canadian Federal Budget, federal corporate tax rates are much lower today and going lower still.
Budget 2006 announced that the general corporate income tax rate would be reduced from 21 per cent to 19 per cent by 2010. The Tax Fairness Plan proposes to further reduce the rate to 18.5 per cent beginning in 2011.
On the provincial side, the corporate tax rate has fallen dramatically too. According Alberta Finance, Tax and Revenue Administration, the Alberta corporate provincial tax rate has fallen from 15.5% to 10%.
Given that both the federal and provincial tax rates have been reduced dramatically, we should not be surprised that the government's share—often referred to as government take—has fallen dramatically. Yet, I found no mention in the Alberta Review Panel Final Report (PDF, 2.25mb) of this dramatic change. I find this omission glaring.
Recall from our earlier article that governments' take has fallen. Given that the governments' tax rates have fallen by roughly a third, we should expect that a developer's take has increased dramatically. A key question we should ask of our governments is as follows: While the federal and provincial tax rates were being reduced, why was the oil sands fiscal regime not recalibrated to keep the proportional shares more or less equal?
Calgary model Judith Aldama is featured in the photograph, which is hosted at Flickr. If you click on the picture of Judith, you will be taken to where you can view a larger version and see even more pictures of her.
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