Opinion: How one tax change could turbocharge Alberta’s energy sector

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How one tax change could turbocharge Alberta’s energy sector GlobeDebate

This translation has been automatically generated and has not been verified for accuracy.Yrjo Koskinen is a professor of finance and associate dean of research at the University of Calgary’s Haskayne School of Business. Ari Pandes is an associate professor of finance and area chair for finance at Haskayne.

There is an elegant way forward, however. Ottawa can change federal tax regulations around income trusts through a reversal of what is known as the 2006 Halloween Massacre, to incentivize forward-looking investors to invest now in loss-making ventures with the intention to sell or transform the businesses to income trusts once they become profitable.

Reviving tax breaks for income trusts to specifically promote and support low-carbon energy technologies – such as hydrogen, geothermal, wind and solar, along with carbon capture and storage – would be a relatively simple measure for the federal government to undertake. It would not require direct infusions of cash at a time when the government faces expensive demands for bailouts; instead, it would only need to rely on market forces to achieve its goals.

 

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