Government challenged on tax cuts to oil sector

  • November 22, 2007
{mosimage}The federal government has some explaining to do about climate change and tax breaks. A coalition of churches with the help of an environmental legal group are hoping to hear what the government has to say early in 2008.

The Canadian ecumenical justice coalition KAIROS, along with the lawyers at Ecojustice, have petitioned the auditor general’s office to formally state how billions in tax cuts to Canada’s profitable oil and gas industry squares with the government’s legal obligation to cut greenhouse gases under the Kyoto Protocol.

Canada’s oil and gas industry, which claimed profits of $31.1 billion in 2006, gets $1.4 billion in annual tax breaks from the federal government, according to KAIROS. Not collecting taxes from the oil and gas industry is no different from handing profitable companies subsidies to produce more greenhouse gases, said KAIROS corporate social responsibility expert Ian Thomson. Meanwhile, the same government that is handing oil and gas companies $1.4 billion is spending $960 million in 2007-2008 to encourage renewable energy production and energy efficiency, according to the petition.

The auditor general has 120 days from receipt of the petition to reply.

The KAIROS-Ecojustice petition follows on the heals of a legal action launched by Ecojustice in the Federal Court of Canada in September to force the governing Conservatives to comply with the Kyoto Protocol. Though Canada ratified Kyoto in December 2002, making it the law of the land, the Conservatives have argued inaction by previous Liberal governments makes it impossible to meet the Kyoto targets.

“It doesn’t make sense to have a federal plan to fight increases in greenhouse gas emissions while at the same time providing huge subsidies to our number one source of increase,” said Thomson. “It’s kind of working at cross purposes.”

KAIROS and Ecojustice (formerly Sierra Legal) are bewildered by a budget move which eliminated subsidies to low income households to improve home insulation and update furnaces for greater energy efficiency while at the same time the government slowly phases out accelerated capital cost allowances for corporations over eight years. Where was the eight-year phase out for low-income households? asked Ecojustice lawyer Albert Koehl.

“This $500-million investment (Energuide Program for Low Income Households) would make us $1 billion,” said Koehl. “Even in terms of a cost-effective way to reduce emissions this is, I think you can call it, some of the low-hanging fruit in terms of greenhouse gas emissions. People who don’t have resources, lower income citizens, they’re the ones who live in the poorest housing where the biggest improvements can be made and therefore the biggest energy savings.”

Even if the Conservatives are unlikely to change their policies on the basis of a petition from churches and social justice groups, the petition will help educate the public about public policy and climate change, said Koehl.

“The fact that the minister of finance may say we’re not going to do it, that’s just part of it,” he said. “That’s why we have the auditor general, to highlight these things for the public.”

“We would consider it a successful effort on our part if we did get complete and detailed answers from each of the federal ministers we’ve identified in the petition,” said Thomson.

“These policies of the government — number one these generous subsidies to the oil and gas industry and number two the abrupt elimination of the low-income household program — this conduct is so absurd in the context of alarming science about climate change, and I think our alarming observations of climate change, that ultimately the government will relent,” said Koehl. “It’s just a question of how long will it take? We’re hoping it will be sooner rather than later.”

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