By Letter to the Editor on February 22, 2020.
I read with interest Owen Holmes’s letter in The Herald on Feb. 15, “Do we still wannabe like Texas?” He indicates that Texas is getting away from gas and oil as a major growth industry and has become very diversified.
Some of the information seems to point in that direction but when I read information like this, I always ask the “why” question. Is it because the oil and gas businesses are slowing down, less demand, like so many experts continually say about our gas and oil industry in Alberta? I believe the prevailing information on the demand for oil and gas will continue to grow for the next 20 to 30 years.
So, the first question is, how is the gas and oil business doing in Texas and how much revenue does the state of Texas receive? The answer: The >Texas oil >and natural >gas industry >paid more than $14 billion in >state >and local taxes and >state >royalties in fiscal year 2018, up 27 per cent from fiscal year 2017, and the second-highest total in >Texas >history, according to a >Texas Oil and Gas >Association news release Feb. 17, 2019. Doesn’t seem like a dying industry to me.
Second question: what is Texas doing to attract all this diversity? Answer: maybe it has to do with their approach to corporate tax and income tax. Most businesses in the state are >taxed >at the rate of one per cent. Some small businesses will have a >tax >rate lower than one per cent. >The NDP and their supporters cry about Alberta cutting the corporate taxes in Alberta by one per cent each year for four years, taking us from 12 per cent down to eight per cent. If you want to attract diversity, then you need to be competitive, and even at eight per cent we are not even in the game. In the U.S. there are six states with zero per cent corporate taxes, 30 states below eight per cent and the highest being 12 per cent.
Total >revenue >to the >Alberta government >from >oil and gas >development including royalties, rentals and fees, and mineral rights sales was $5 billion in the 2017-18 fiscal year, accounting for almost 11 per cent of the total >Government >of >Alberta revenue.
We are at risk right now on three major projects, a $75-billion investment in infrastructure and tens of billions in tax revenue. We have the resource; we can take advantage of that revenue to diversify or rely on your taxes and government debt to make that happen.