On February 5, 2014, the BC government announced that it is unlikely to release the detailed tax regime for the province’s proposed liquefied natural gas (LNG) sector before the fall legislative session. In his address to the media, BC Finance Minister Mike de Jong explained that he expects the government to make the framework for the LNG tax public when he presents the provincial budget on February 18, 2014, but tax rates are unlikely to be released until legislation is tabled this fall.
In September 2013, the BC government cancelled the fall sitting of the legislature on the basis that it required time to draft the complicated LNG tax legislation. As noted in our prior blog post, the government initially intended to finalize the applicable tax rules by the end of November but decided to delay providing details until completing further consultations with industry and LNG project proponents.
The BC government faces the challenge of developing a tax regime that will fund the promised 30-year $100 billion LNG “Prosperity Fund”, while ensuring that BC remains competitive with other jurisdictions seeking to export LNG. However, BC’s LNG tax represents only one factor under consideration as LNG proponents prepare to make final investment decisions on their BC-based projects. In addition, project proponents are continuing to navigate applicable environmental and regulatory processes and engage with potentially impacted stakeholders and First Nations.
At least ten LNG projects are currently planned in BC. No final investment decisions have been made to date, but certain project proponents have indicated that they intend to do so before the end of 2014. It remains unclear whether delaying the release of a detailed LNG tax regime will impact the ability of proponents to make final investment decisions according to their current project schedules.