No taxes until you’re rich

Is Alberta Going Broke?, asked the headline.

It’s been receiving up to 40 per cent royalties on conventional oil & gas resources. This type of revenue totaled half its budget, a record $14.3 billion last year.

Many oilsands projects are kicking into gear, which now account for about a quarter of Alberta’s energy production.

[But] to spur the massive amount of investment needed to dredge tar-like bitumen out of the often frozen earth and transform it into usable fuel, the government negotiated a new royalty regime in 1996 with the heavy-oil industry, or any producer of unconventional energy resources, requiring only a one per cent royalty on revenues until their capital costs (which tend to continue) are accounted for.

The bottom line: Of the big bundle of resource money that landed in the government’s lap last year, only $905 million came from the oilsands.