Connect with us
[bsa_pro_ad_space id=12]


Advocates of windfall tax on oil and gas sector can now point to EU for inspiration


6 minute read

By Nojoud Al Mallees in Ottawa

Proponents of imposing a windfall tax on the Canadian oil and gas industry now have another global power setting precedent for the policy.

On Wednesday, the European Commission proposed levying such a tax on the energy sector and redirecting funds to households and businesses struggling with high inflation. It estimates the policy would bring in 140 million euros (around $186 million) in revenue.

The European Union is not the only jurisdiction to pursue an extra tax on the energy sector. Earlier this year, the United Kingdom imposed a windfall tax on oil and gas producers. Since then, however, new Prime Minister Liz Truss has come out against the policy and indicated she would not bring in any new windfall taxes.

Progressives in the United States have also campaigned for a windfall tax on oil and gas companies amid rising inflation.

The global push for windfall taxes comes as some corporations, especially those in the oil and gas sector, have posted record profits since the onset of the COVID-19 pandemic.

In Canada, the latest quarterly report on gross domestic product from Statistics Canada says non-financial corporations have benefited from strong energy prices. According to the federal agency, dividends paid out by such corporations were up 9.1 per cent in the second quarter of 2022. Meanwhile, worker compensation in Canada rose two per cent.

Senior economist David Macdonald of the Canadian Centre for Policy Alternatives recently looked at just how much gross domestic product is accounted for by corporate profits. His analysis found that after-tax corporate profits reached a historically high percentage of the total Canadian economy output in the second quarter of this year.

In contrast, Macdonald found workers’ compensation as a share of gross domestic product fell to the lowest level since 2006. “The inflationary period has been a tremendously good period for corporate profits, less so for workers’ wages.”

Macdonald supports imposing windfall taxes to address this trend.

The NDP has been calling on the federal government to extend the windfall tax levied on financial institutions earlier this year to the oil and gas sector as well as big box stores. The party has argued the funds raised from extending the windfall tax could be used to send more money to low- and modest-income families struggling with high inflation.

On the latter proposal, the NDP posted a win when the Liberals announced on Tuesday they would double the GST rebate for six months. As for extending the windfall tax, NDP finance critic Daniel Blaikie said he’s received no indication from Finance Minister Chrystia Freeland that it was on the table.

“We are going to continue to push on these things,” Blaikie said. “And I think the announcement about the GST rebate is cause for some optimism that even when the government gets it wrong out of the gate that we can make them change course.”

The Finance Department declined to comment on whether it is considering extending the windfall tax policy.

Many economists oppose windfall taxes over concerns they can discourage business investment.

Michael Smart, an economics professor at the University of Toronto and co-director of the Finances of the Nation project, said the EU’s pursuit of a windfall tax reflects a unique situation in that region, with energy prices having shot up dramatically.

“We don’t face quite the same situation here,” Smart said, adding that windfall taxes are difficult to implement and should be seldom used.

“I don’t think it’s warranted (here).”

Mostafa Askari, chief economist at the Institute of Fiscal Studies and Democracy, said if the government were to pursue a windfall tax, it would first have to decide its intended purpose.

“Targeting (the) energy sector, to me, it’s somewhat odd, unless there is a desperate need for extra funding for the government,” he said.

Given government revenues have been up because of high inflation, Askari said the case for extra funding isn’t there. The other concern, he said, is oil and gas companies might be able to pass on these additional taxes to consumers through higher prices.

However, despite disagreement among economists on the policy, polling suggests the overwhelming majority of Canadians support a tax on businesses whose profits were extraordinarily high during the pandemic. A poll conducted by Abacus Data on behalf of the Broadbent Institute and the Professional Institute for the Public Service of Canada in July 2021 found 87 per cent of Canadians were in favour of the policy.

The survey was conducted online with 1,500 Canadian adults from July 13 to 19, 2021. It cannot be assigned a margin of error because online polls are not considered truly random samples.

Blaikie said the NDP is relying on public support to convince the Liberals on the policy.

“I think the more Canadians that are out there calling for these kinds of measures alongside us in the NDP, the more likely we are to see a positive result.”

This report by The Canadian Press was first published Sept. 18, 2022.

Storytelling is in our DNA. We provide credible, compelling multimedia storytelling and services in English and French to help captivate your digital, broadcast and print audiences. As Canada’s national news agency for 100 years, we give Canadians an unbiased news source, driven by truth, accuracy and timeliness.

Follow Author


Mountie shoots armed man on First Nation, suspect in life-threatening condition

Published on

MASKWACIS, ALBERTA, CANADA — Alberta’s police watchdog has been called in to investigate after a Mountie shot an armed suspect on the Samson Cree First Nation.

RCMP say in a release that the wounded man was flown to hospital in critical life-threatening condition.

Police say they responded to a report of a man firing a gun on the reserve south of Edmonton on Thursday afternoon.

RCMP say there was a confrontation and an officer fired their pistol and injured a 27-year-old suspect.

No Mounties were hurt.

Police say the Alberta Serious Incident Response Team has taken over the investigation of the shooting and the RCMP will conduct its own internal review.

This report by The Canadian Press was first published Dec. 1, 2022

The Canadian Press

Continue Reading


‘Cautiously optimistic’: Lawyer for trucker in Broncos crash waiting on Federal Court

Published on

By Bill Graveland in Calgary

A lawyer for a former truck driver who caused the deadly Humboldt Broncos bus crash says he’s cautiously optimistic that he will get the chance to argue against his client’s possible deportation before Federal Court.

In 2019, Jaskirat Singh Sidhu was sentenced to eight years after pleading guilty to dangerous driving causing death and bodily harm in the Saskatchewan crash that killed 16 people and injured 13 others.

The Canada Border Services Agency recommended in March that Sidhu be handed over to the Immigration and Refugee Board to decide whether he should be deported to India.

Michael Greene, Sidhu’s lawyer, said if the Federal Court decides not to hear the case, the deportation process would continue.

He said all written arguments with the Federal Court were filed in July, adding that no news can be good news when waiting for the court to make its decision.

“I’m cautiously optimistic, but I know enough not to get cocky about something like that,” Greene said. “Usually when it takes time, it means you’ve got an arguable case.”

It is also a high-profile case, so a judge might want to be extra careful, he said.

Court was told that the rookie Calgary trucker, a newly married permanent resident, went through a stop sign at a rural intersection and drove into the path of the Humboldt Broncos bus carrying players and staff to a junior hockey league playoff game.

The Parole Board of Canada granted Sidhu day parole in July for six months. He can get full parole after that if he follows conditions, including not contacting the families of the victims.

“Day parole means he is at home. He’s with his wife and I can’t tell you how happy that makes them,” Greene said. “They’re trying to get back to some sense of normalcy.”

Greene said even if he is granted permission to appeal before the court and is successful, the matter would be sent back to Canada Border Services Agency for another review. He said the original officer put all the weight of his decision on the gravity of the harm caused.

“You can’t get your hopes up too high,” Greene said.

“Sometimes the judge will make comments in their decision that will give some guidance to the (CBSA) officers.”

An online fundraising page set up to raise money to help keep Sidhu in Canada has reached more than $42,000.

A message from Sidhu’s wife, Tanvir Mann, a Canadian citizen, said her husband made a “tragic mistake.”

“When confronted by the unimaginable magnitude of the consequences of his mistake, he did everything he could to make things better,” Mann writes.

“I pray that there are people out there who don’t believe that Jaskirat should be deported and are willing to contribute to my fight to be able to live out our lives in Canada.”

The Canada Border Services Agency has previously declined to comment on Sidhu’s case, but said there are multiple steps built into the process to ensure procedural fairness.

Greene said he understands that several of the victims’ families are still angry.

“It’s completely understandable. It is,” he said. “Everybody deals with grief and loss in their own way.”

This report by The Canadian Press was first published Dec. 1, 2022.

Continue Reading