Canada’s debate over tax fairness just got more interesting.

This year marks the first time that Canadian resource companies are required (under the Extractive Sector Transparency Measures Act , or ESTMA) to publish what they pay to all levels of government in Canada and abroad in relation to the commercial development of oil, gas and minerals.

Publish-what-you-pay was set up to help fight corruption in the developing world, but the data reveals that Canada is getting the short end of the stick when it comes to the public's share of oil revenue.  

When I went through the corporate reports on what they pay in taxes, royalties and fees and then compared that to the production levels contained in the companies’ annual reports, I found that Canadian companies who report significant revenues in other countries (i.e. Chevron Canada, Suncor Energy and Canadian Natural Resources Limited) pay a much higher rate per barrel of production abroad than they do at home.

Commenting on this data in The Guardian, resource governance expert and UBC geography professor Philippe Le Billon said: “Companies in Canada will point to the jobs they are creating rather than acknowledge they could be sharing more of their profits, which mostly goes to shareholders who are not even in the country. In key jurisdictions like Alberta, this has come about after decades of rule by Conservatives who are very cozy with oil interests. The numbers reveal a poor tradeoff: high emissions for not much revenue. It’s long-past time for Canada to follow a model like Norway’s, which captures far more revenue from oil production.”

This revelation comes only two weeks after the Canadian Association of Petroleum Producers (CAPP) launched a push for new tax cuts (or as they call it, “an attractive fiscal framework to encourage investment for Canadian oil and natural gas innovation”) and on the same day they ran an op ed on the same theme in the Globe and Mail. In effect, oil companies are making a request for new subsidies, even though Canada committed to phasing out fossil fuel subsidies in 2009. How we’re doing on that is unclear, as Canada’s Auditor General blasted the federal government in his Spring 2017 report for not providing the information necessary to assess progress on this commitment, but adding new subsidies would be ludicrous.

The Trudeau government has said that it wants to make the tax system fairer, which is an admirable goal. Much of the backlash, however, has centred on the perception that the reforms are targeting small players while letting the big fish get away.  

One way to avoid deepening this perception/reality: rather than trying to close tax loopholes for retail workers, the Trudeau government should be demanding that oil companies pay as much tax here as they do abroad. That would bring in a lot more revenue than any of the other measures they’ve proposed, and would ensure that oil companies pay their fair share.

Sources:

Chevron:

Suncor

CNRL