On October 20 and 21, 2014, the BC Government introduced key new
legislation to LNG projects proposed for the province. The details
of the LNG tax and new greenhouse gas (GHG) legislation are
long-awaited policy and fiscal developments that are critical
inputs to LNG proponent assessments of British Columbia's
business competitiveness. This update discusses each in turn.
The LNG Tax
On October 21, the provincial government introduced Bill 6, the
Liquefied Natural Gas Income Tax Act, which imposes,
starting in 2017, a two-tier income tax on revenues from LNG
sources at the time of production. Effectively, taxpayers with
revenues from LNG sources will pay a tax of 1.5% of net proceeds
from those LNG revenues once commercial production begins and until
their capital investment is recovered (described in the legislation
as a tax on "net operating income"). After that point,
they will pay a tax of 3.5% (rising to a rate of 5% in 2037) of the
amount by which aggregate
