Background > Energy Trusts say Feds got it wrong
Media Release
Energy Trusts Say Feds Got It Wrong
Coalition Expresses Concern regarding Alberta Royalty Review Panel Report
Calgary, AB – October 4, 2007: The Harper government’s sniper approach to taxing Energy Trusts has resulted in what was forecasted a year ago by the Coalition of Canadian Energy Trusts in its substantive report published December 2006.
“The federal government totally got it wrong on October 31, 2006 when it announced a decision to change the tax treatment of energy trusts,” said Sue Riddell Rose a co-chair of the Coalition. “Foreign takeovers, such as that recently announced by PrimeWest Energy Trust, are proof of how the Harper government created a massive destruction to the value of investment holdings of individual Canadians as well as seriously eroding future tax revenues.”
The energy trust coalition forecasted a variety of outcomes resulting from the government’s taxation of trusts. These predictions have become a reality:
- Canadian energy trusts will be exposed to leveraged buy-out groups and other foreign interests. This negatively impacts future tax revenues as well as Canada’s security of energy supply. Millions of Canadians lost and continue to lose hard-earned dollars. Notably, many seniors are feeling economic impacts on their day-to-day lives. Plus the majority of Canadians not in a defined pension plan continue to see their retirement savings shrink.
- Service companies to the energy sector are experiencing a work slow down and have noted much of this relates to the energy trusts reducing their activity.
- Junior oil and gas companies are challenged to raise capital for capital investment and value creation. As predicted, this sector is experiencing severe economic challenges because they are no longer able to count on trusts to purchase assets.
- New public offerings on Canada’s equity markets have stalled in the first half of 2007, with the value of new issues off 400 per cent from the same period of 2006.
Many notable experts have told government its decision should be altered to find a win-win solution for Canadians. This has occurred through formal parliamentary processes and by thousands of comments made in the media.
“We believe the government needs to sit at the table with energy trusts and find a solution that achieves the goals of government and that of the energy sector,” noted Riddell Rose. “We have said it all along – it is never too late to get it right.”
The Coalition has noted that on the other hand, the Stelmach government appears to be prepared to continue consultation with Albertans and their energy industry regarding the Report of the Royalty Review Panel. The Premier, unlike the Prime Minister, is willing to listen and to take the time required to work towards a solution that factors in the multitude of complex variables that need to be understood and considered.
“We do not believe the Alberta report should be accepted as written. There are many factual errors that are now being identified within this scoping document and we believe the economic impact to Albertans will be very negative if this review report is simply adopted without scrutiny, further assessment and input,” commented Riddell Rose. “We need a wiser decision for Albertans and their energy industry that will maintain the position of Alberta and Canada as a global energy provider.”
The Coalition continues to press the message to the provincial and federal governments - it is never too late to get it right!
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