The $300M question

Has enough already been said about tax breaks for oil companies? Maybe not, if there’s a chance the government will ease off on its plan.

An increase in the price of a barrel of oil might make the whole thing go away. At least until another day of reckoning. If it’s not now, it will be sometime later. The only question is when, and how much it is going to hurt.

At present, here’s what the oil companies are telling the province: Margins are so low, if you want us to keep producing, you have to help us reduce our cost of doing business. How about that pesky linear assessment? Sure, it will hurt, but will it hurt more than if we shut down production altogether?

There’s your basic argument, and our provincial government clearly has accepted it. Municipalities are horrified. As reported, the loss in revenue some are facing would be catastrophic. M.D. of Lesser Slave River CAO Allan Winarski went as far as to say last week some municipalities will cease to exist – simply close up shop and turn in the keys to the provincial government. Lesser Slave River is looking at a $3 million hit, he said. Already reported was that if the M.D. wants to maintain the status quo, it would have to double property taxes to make up for that loss.

The $300 million question (that’s the total loss in revenue to all municipalities, projected) is whether the oil industry exodus would really happen if the tax break weren’t implemented. Or, on the other hand, whether there will really be any long-term benefit to the economy by granting it. And then (the government must be wondering about this), what the backlash at the polls might be.

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