It seems to me that some politicians and their supporters often frame oil and gas projects in generic ways to generate buy in from the public.
For example, they might say that a particular project will create jobs. They might say that it’ll generate tax revenue, which then can be used to build schools and hospitals.
Except these are poor reasons to support any one specific oil and gas project.
The idea that an oil and gas project creates jobs isn’t unique to that project. Lots of projects create jobs. Lots of industries create jobs. The oil and gas industry doesn’t even employ the most jobs in Alberta: the retail industry does. Forestry, fishing, mining, quarrying, oil and gas collectively accounted for only 6.2% of all those employed in Alberta in 2019. That’s 7th place.
The idea that an oil and gas project generates tax revenue isn’t unique to that project. Lots of projects generate tax revenue. Lots of industries generate tax revenue. The oil and gas industry doesn’t even generate the most corporate tax revenue in Alberta. They brought in only 2.8% of all corporate tax revenue in 2019, putting them in 12th place.
Even then, the idea that businesses generate tax revenue for governments to use to pay for public services and infrastructure is misguided. Tax revenue isn’t an investment corporations make; it’s a payment for services rendered.
Corporations don’t invest in hospitals; they pay the government for keeping their workers healthy. They don’t invest in schools; they pay the government for keeping their workers educated. They don’t invest in roads; they pay the government for providing them with a robust transportation network so their workers can get to work and their products can get to market.
If voters are asked to support a particular project, they should ignore any generic reasons politicians (or the corporate backers of that project) provide to convince them that it’s in the best interest of the public.
Specific projects should be judged based on their specific benefits, not benefits they share with hundreds of other projects.
4 replies on “Oil & gas projects provide tax revenue & create jobs. So what?”
Kim, doesn’t the oil & gas industry differ from most other sectors in that they not only create tax revenue but pay royalties to the government for the extraction of natural resources? In 2019/20 royalties accounted for $6 billion out of $46 billion of the overall revenue, ~13%. Cf. https://www.alberta.ca/revenue.aspx I agree that every project needs to demonstrate its own merit.
Yes, except royalties are payment for being able to access the publicly-owned resources. They’re paying for a raw material. It’s no different from a clothing manufacturer paying a supplier for bakes of cotton or a hardware store paying a sawmill for lumber.
Agreed. In the end, the payment of royalties for natural resources means that the GoA sees more revenue from the same amount of activity in the oil & gas sector than in other sectors, let’s say retail.
This sector also receives more financial subsidies than other sectors. For example, they received nearly $5 billion in royalty discounts between 2015 and 2020.
https://kimsiever.ca/2020/09/12/alberta-gave-5b-in-royalty-discounts-to-oil-gas-sector-since-2015/