On needless giveaways

Predictably, the Cons are far more committed to rewarding supporters than to taking a sound environmental step, as Jim Flaherty has flatly rejected the idea of eliminating tax breaks to the oil industry:

Finance Minister Jim Flaherty has rejected a request from environmental groups to end an estimated $1.4 billion in annual tax breaks to the booming oil industry.

In a seven-page response to the Sierra Legal Defence Fund, Flaherty defends special tax treatment for the resource sector noting its importance as a source of investment and jobs...

Albert Koehl of the Sierra Legal Defence Fund said the oil and gas sector - a major source of greenhouse emissions - is making record multibillion-dollar profits and should not be getting any subsidies at all.

"Subsidies are for industries in transition," he said. "This is an industry no longer in transition and it has gotten over the last three decades about $40 billion from the federal government."

So how vital is the preferential tax treatment for the industry?

Greg Stringham of the Canadian Association of Petroleum Producers denied the $1.4 billion tax-break estimate, which is based on research by the Alberta-based Pembina Institute.

He said the estimate is based on outdated information but couldn't provide a current estimate. The industry made $27 billion after taxes last year, he said, a return of 14 per cent.

One would think that returns of 14% would be incentive enough for future investment in the oil patch - particularly when the most recent estimates suggest that the current tax breaks represent roughly 5% of the total after-tax profits of the industry. But while the Cons have happily scrapped environmental programs pending an evaluation of their efficiency, today's announcement demonstrates their complete lack of interest in ensuring that corporate tax giveaways are serving any useful purpose. Which, I suppose, probably will ensure that all the more investors find their way into the sector to benefit from the Cons' continuing largesse.