Implications Of Canadian Oil Tax Policies

The purpose of the thesis is to examine some of the implications of the policy initiatives taken by both levels of government during the 1974-80 period (i.e., from the OPEC oil embargo and subsequent quadrupling of posted world oil prices to the introduction of the National Energy Program, or NEP). A survey of the fiscal instruments employed by both the federal and the oil-producing provincial levels of government to distribute the oil revenues generated in Canada is presented. The focus of this survey is primarily on the pre-NEP regime and the immediate post-NEP regime. The remainder of the thesis then deals with some of the distributional and efficiency aspects of these tax regimes.;One of the distributional implications of the intergovernmental revenue-sharing from oil production, as defined by the underlying tax regime in place, is that the pre-NEP tax regime, for example, will have repercussions for provincial revenues (for both the have and the have-not provinces the thesis examines the ramifications of the pre-NEP regime on the equalization program (in place at that time). Specifically, the implications for the magnitude and the funding of the equalization payments are examined. Correspondingly, a recommendation favouring an alternative system of equalization--a two-tier program which with the second tier taking the form of an interprovincial revenue-sharing pool (and focussing essentially on revenues under sole provincial control)--is presented and evaluated.;The thesis also examines the economic efficiency aspects of the pre- and post-NEP tax regimes. In particular, we address the issue of an inefficient allocation of resources within the oil industry itself. That is, based on the assumption that the pure-profits tax is economically efficient (i.e., optimal) then the pre- and post-NEP tax regimes are predicted to distort the allocation of exploration and developmental capital employed in the production of alternative types of oil (e.g., conventional, secondary, tertiary, non-conventional and frontier oil). The result therefore, is an efficiency loss incurred by Canada. An attempt to illustrate the magnitude of this efficiency loss is also presented. . . . (Author\u27s abstract exceeds stipulated maximum length. Discontinued here with permission of author.) UM