Editor:
Mr. Jef Keighley in his letter of Nov. 18 RE: oil and gas subsidies accuses me of overlooking or being unaware “that the dictionary definition is out of date with respect to international trade.” I have done neither and it is not. The World Trade Organization deals with international trade – between nations with different legal systems, languages and tax regimes. Not all requisites for that venue are relevant for a single jurisdiction within Canada. Mr. Keighley paraphrases five practices that the WTO deems a subsidy but he neglects to mention the necessary second coordinate clause part of the definition, Article 1, 1.1(b), namely that “a benefit is thereby conferred.”
Note that one of the WTO terms deemed a subsidy is “government revenue that is otherwise due is foregone or not collected, e.g a tax credit.” This definition of tax credit is contrary to the Canadian tax system, wherein a tax credit is a mechanism by which a taxpayer fulfilling certain conditions may have their tax rate reduced or partially offset as solely determined by the government. Just check your own tax return, Form 1, Step 5, Part (B), “Federal non-refundable tax credits.” This is part of the process of calculating tax payable, not an absolution of the obligation to pay once due, as implied by the WTO. The same methodology and language is used to calculate royalties payable.
Loan guarantees are a form of subsidy – but only to the extent which a government lends monies in excess of those commercially available to the recipient. Nothing like that is happening in B.C., however. In fact, industry pays royalties and taxes to the government, both determined solely by government. Neither confers a “benefit” to industry. No benefits, ergo, no subsidies. All substance, no semantics.
Try harder, Jef.
Richard Corbet, P.Eng., Sechelt
