REGINA – Oil and gas companies pay more to operate in Saskatchewan than they do in Alberta, Manitoba or North Dakota, says a joint report by the provincial government and industry.
The study by the Canadian Association of Petroleum Producers, Small Explorers and Producers Association of Canada and Saskatchewan Energy and Mines looked at industry costs like taxes and royalties.
“Of the four jurisdictions, Saskatchewan generally has the highest crown royalty and freehold production tax rates,” said the report.
“Saskatchewan has the highest income tax rate, sales tax rate and fuel tax rate.”
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In 1995, the industry paid $13 million in corporate income tax, $30 million in sales tax and $2 million in fuel tax. Royalty and freehold production taxes totaled about $382 million.
As well, Saskatchewan is the only jurisdiction to charge petroleum companies a corporation capital tax, which totaled $67 million.
The report said the biggest expense for oil companies can be power, at more than 30 percent of the total operating cost on low productivity wells. The industry paid about $82 million to SaskPower in 1995.
Other industry expenditures included $19 million in mineral and surface lease rentals and $54 million in property tax.
The opposition parties called on the government to give the industry a tax break.
“The oil and gas industry contributed $2.5 billion to the provincial economy last year,” said Liberal MLA Buckley Belanger. “As staggering as this figure is, tax relief would result in even more investment and greater economic benefits for the industry and the province.”
Progressive Conservative MLA Don Toth said if the province’s tax rates were more competitive, there would be more oilfield activity, more investment and more jobs.
Payments reduced
But premier Roy Romanow called that view too simplistic. He told reporters when the province’s economy is performing well, as it has under the recent oil boom, the federal government responds by reducing equalization payments.
The province’s energy minister, Eldon Lautermilch, said this year’s sale of crown oil and gas rights is a good indicator that oilfield activity will continue to be strong, providing oil prices remain stable. Revenues in 1996 were $122.2 million, the fourth highest on record.
