Oilsands Money Gushing into Ottawa
September 29, 2005 · By Tom Cerber
The high price of oil has had various politicians, academics, and journalists calling for a new scheme to “share” Alberta’s wealth with the rest of Canada. I noted a while back that NOT among those demanding this publicly were senior members of the Liberal government.
A study released today by the Canadian Energy Research Institute explains why. The Edmonton Journal reports:
A combination of personal, corporate and indirect taxes are expected to send $51 billion to Ottawa, 41 per cent of the $123 billion the oilsands industry is expected to deliver to Canadian governments, according to the 20-year forecast.
Alberta would receive the second-highest amount from royalties and taxes at $43.7 billion. Municipalities, including those in Alberta, would receive $16.9 billion in taxes, and other provincial and territorial governments would collect $11.5 billion.
“That’s (the Ottawa share) a very striking number,” said Govinda Timilsina, one of the authors of the study. “There’s some misconception as to what is the realistic view (of economic benefits).”
The federal government takes in the biggest share of tax revenue. Do they want to threaten that source of tax revenue? Not likely, for the same reason they don’t want to cut gas taxes. They’d only threaten that revenue if they thought that they could replace it with something else. Given the current state of the economy, it’s unlikely they could find a different source to recover the very large amount of money they take in from the oilsands.
Paul Martin of course was the Finance Minister and had intelligent bureaucrats giving him advice, although many of those same intelligent bureaucrats were taught by Thomas Courchene, who recently said some silly things about Alberta’s wealth that had little to do with economics.
This is enough to keep in mind that goverments don’t always do what’s economically rational (understatement alert!).
Again, this shows the extent to which the federal government is awash in too much money—contrary to the general misperception that the Alberta government benefits most from the oil sands. The inability of Albertans to hold the federal government accountable for how their resource revenue is spent, speaks volumes about why Canadian government is as irresponsible as it is. There’s simply too much money to throw around at too many “projects” (Central Canadian electoral platforms) and not enough accountability to the right constituents for how that money is spent. As far as voters in Ontario are concerned, oil sands revenue is simply bonus, disconected from any economic diversification that it could go towards in Alberta. Whereas for Albertans—who have little say federally—oil sands revenue is their opportunity to use their resources to plan for their future economy.
[...] Via Tom at thepolitic, a report from the Edmonton Journal, where an estimate of the Tar Sands’ revenue going to Ottawa places it at $51 billion over the next two decades. By the estimates calculated, Ottawa will take the single largest share of any jurisdiction. [...]