February 23, 2015 BC Chamber Public Affairs Update

Prime Minister Stephen Harper was in B.C. this week, announcing the federal government’s intention to promote LNG projects in B.C. through changes to the tax system. The BC Chamber and the Canadian Chamber of Commerce highlighted the importance of this tax policy change in a recent letters to the Minister of Finance Joe Oliver.

LNG capital assets acquired between now and 2025 will be subject to a capital cost allowance rate of 30 per cent for equipment, and 10 per cent for buildings. That will allow allowing LNG proponents who invest in British Columbia to deduct a higher share of capital costs. Equipment is currently subject to an eight per cent rate, and buildings are subject to a six per cent rate.

The change is designed to help companies move forward with developments at a time when a number of energy companies have reduced capital investment in response to plummeting oil prices. Prime Minister Harper said the incentives will provide the right conditions for the LNG industry to succeed and compete in the global economy while encouraging job growth.

B.C. Premier Christy Clark said the change will make B.C. a more attractive jurisdiction to invest for LNG proponents. She said B.C. is already more competitive than Australia; these incentives will help increase B.C.’s position against competition from the U.S., specifically Washington, California and Oregon.

The federal government anticipates the move will reduce corporate tax revenue by ‘less than $50-million’ over the next five years.

Deputy Premier and Minister of Natural Gas Development Hon. Rich Coleman introduced new legislation this would that, if passed, would guide the regulation of construction, operations and permitting of LNG development on federal port lands.

Bill 12 – the Federal Port Development Act (FPDA) – will extend provincial authority to LNG-related development on federal port lands. If passed, the bill would detail how the B.C. Oil and Gas Commission would oversee LNG development at federally-regulated ports. It also authorizes the provincial government to enter into agreements with the federal government and a federal port to administer and enforce provincial law on port lands.

Proposed LNG projects in Prince Rupert – specifically Pacific NorthWest LNG and Prince Rupert LNG – may be the first impacted by the new legislation.

Marine traffic and LNG shipping operations are under Transport Canada’s jurisdiction and would not be affected by the bill.

British Columbia is expanding the Digital Animation or Visual Effects tax credit to post-production activities, and extending the Interactive Digital Media tax credit to 2018. The tax credit will apply to labour expenditures on eligible post-production activities for productions.

Introduced in 2010, the Interactive Digital Media tax credit was set to expire in 2015, but Budget 2015 extends the credit to 2018 to continue providing support for the digital media industry.  The film industry is spends $1.1 billion per year on production in B.C and generates and estimated 20,000 jobs, B.C.’s digital-media industry generates about $1.2 billion in revenue and employs approximately 14,000.

The current and expanded tax credits serve to reduce the cost of wages for film and television companies, and make operating in B.C. more affordable.

MLAs Gary Holman and Rob Fleming introduced four private members’ bills this week:

• The Parliamentary Calendar Act would make fall legislative sittings mandatory
• The Youth Voter Registration Act would allow voter registration to start at age 16
• The Legislative Standing Committee Reform Act would expand the autonomy of committees and create new committees for forestry, agriculture and the arts
• The Fixed Fall Election Amendment Act would move the fixed date of provincial elections to the fall to provide more time to scrutinize the provincial budget

Very few private member bills become law but they can influence government policy and public opinion.