Time to settle the tax issue for the resource industry

This report presented a brief comment on policy issues concerning taxes imposed on the resource industry. It was suggested that if the resource industry in Canada is to remain competitive beyond the current boom, the federal government should provide a more stable tax environment for investment in the longer run. With the current internationally competitive tax rates and high neutrality among energy sectors, there is presently a unique opportunity to settle this issue and to improve the tax system as a whole. It was suggested that the federal corporate income tax rate on resource profits should be reduced from 28 per cent to 21 per cent as it is in other sectors. It was also suggested that the resource allowance should be replaced with deductibility for resource royalties as payment for the cost of using provincially owned resources. This report also described other changes that could be implemented to improve the tax system and to enhance the competitiveness of the resource sector. It was noted that the changes could result in a single corporate income tax rate on all industrial activities by 2005