Fair Share??

[ivbinconned]

Fair Share

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest, the oil man) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33.

But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).

The tenth (the ALBERTA oil man)now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four NDP'ers in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth, the Alberta oil man, and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D. - Professor of Economics, University of Georgia
For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.

[wilagro]

What a load of crapola you peddle. Designed to justify cries for less taxation by those with higher incomes than the average Joe. I have seen this BS pasted all over the internet by the rightards who think that services that we need every day...police, fire protection, health services, postal service, etc., etc., should be provided but don't want TAXES assessed from them to PAY for these services and others.

[ivbinconned]

Well Willy, in my province it is the "police, fire protection, health services, postal service, highway workers, Sask power workers and sasktel workers, and all other "government" employees that are paid the highest wages. They demand Alberta oil workers type salaries in the Saskatchewan economy!!

So much for the righteousness of the left and NDP elements. Given the opportunity they grub and skim and pry from the public every $ they can.

And I’d bet you pay the bare minimum of tax when you can!!

[silverback]

Another insightful reply from Wil. True lefty response - attack the messenger but offer no truthful alternative opinion.

Tell us then oh enlightened one, who exactly does pay the majority of the taxes in our society. I trust you can back it up with sources right?

This story has been told before, and it is good to hear it again and again. The reason it keeps going is that it is true poor willy and no lefty can ever discount its accuracy.

[wilagro]

Silverback: I have paid my share of taxes in my lifetime. I didn't begrudge doing so (actually I had no choice in the matter).

I used RRSPs when possible to mitigate paying tax...nothing wrong with that either.

I get so tired of people who have all of the sudden "made it big", who greedily want to keep most of the new-found riches and brag about...if THEY want medical care THEY should be allowed to pay for it themselves and opt out of the medicare system and its expense (paid for out of taxes).

Equating medicare with communism is totally b.s. as well.

Getting back to "Fair Share" for the "big oil" people...Ralph Klein and his gang made sure that their foreign investors got the gravy and we got the bowl. Time for a change, and if Stelmach won't do it, then it is time to put in another party that will.

[mustardman]

There are countries that have a lot lower taxes than Canada , BUT You wouldn't want to live there.

Quit bitc-- and pay your taxes and be thankful you live in the society that we've got here in Canada.

If you live in Alberta remember this is a democracy , the cons have been in for 40 years , get them out and revamp your royalty structure so your not giving it away and then ,maybe your gov't could reopen the hospitals and schools and whatever else it Closed because they had no money.

Heck you could be like Alaska where Every man,woman and child gets a cheque from oil revenues each and every year.

[ivbinconned]

Willy and mustard suffer from the same infliction that so many in Saskatchewan suffer from.
FEAR, LOTHING and ENVY!!

They have no understanding of whart it takes to create wealth.

And Mustard...you have not had a "Conservative" government for 40 years...no one in canada rrealy has!!

They are Conservative in name only...and have acted quite liberal with your money.

A big swing further to the left would be a big mistake...but if that is what turns you on...move to Cuba.

[wilagro]

ivbinconned: I know how to create wealth...I've been doing it all of my life. Every time I milked a cow, or slopped a hog, or seeded a crop and harvested it, I created wealth.

Wealth is created from LABOUR or LABOR if you are an American.

Now, I am tired of creating wealth and I want you to keep on paying taxes and I will gladly cash my pension checks and thank you profusely. Please keep it up.

No, I don't want to live in Cuba...shortage of toilet paper and toothpaste doesn't appeal to me. I am a capitalist with a social conscience. Somewhat like your NDPers in Saskatchewan.

[Lifer]

Thanks for the post. iv.... Excellent comparison for those who have actually "earned" the dollars.

What it ignores when compared to the Alberta resource situation is the principle that the resources are owned by the Alberta people. A "fair share" has to accept this principle.

When someone thinks that by providing a service for some one some how makes them an owner of that asset that really grinds my gears.

[ivbinconned]

Thanks lifer for your reply.

But I will once again post a question that I have posted before but no one has every attempted to answer.

IF the pioneers and explorers and risk takers and gold panners had all been told, "go ahead, dig, drill and explore if you want to take the risk...but what ever you find...what ever you gain...THAT, you must remember belongs to everyone"!!!

Would there ever have been a gold rush? Would there ever have been a "Leduc"??

It is beyond me why some can't see that if Coppers boys are getting paid a great wage working in the oil patch that, THAT TOO, should be looked at, as a "royalty" PAID to Albertans!!

Funnel more throough the government and watch the abuse !!!

Also through the high wages paid to workers in the oil and gas sector...higher taxes than usual are getting paid into the pot!! "A royaty"and public benifit!!

[ivbinconned]

Or put another way...from another site...

"Everyone is talking about a "fair" royalty without defining what is fair!"

So the oil/gas companies get to
-speculate on land,
- rent the mineral rights from the government
- pay landowners / residence to do seismic (who then pay taxes to the government
- Do the seismic (paying a seismic company who pay taxes, then the employees pay taxes
- Analyse the results (employees get paid who then pay taxes
- Pay to drill a well (drillers/employees pay taxes)
- hopefully discover marketable reserves
- Pay to design and build facilities to produce reserves (companies/employees paying taxes all the way along)
- Give the government their royalties
- Find a buyer for the "peoples" energy
- Final, if they should turn a profit.....pay corporate taxes.

So Eddie Strom er Stelmach wants to upset the apple cart to score points the the socialists.

Alberta is ROLLING in taxes.


The larger the oil/gas producer the easier their capital will leave the province for better rates of return. It all about RoR, which includes costs of production(very high in Alberta) and Risk (was Low in Alberta but is now increasing).

The report was incomplete anyways and always bad policy to go off of incomplete information



As an armchair economist it's always amusing to hear people ranting on about "Big Oil" presumably vs those "mom and pop" offshore drilling and tar sand upgrader projects we all reminesce about. Since the tar sands belong to "the people" perhaps a compromise can be reached whereby for every 100lbs of tar sand mined by "Big Oil" a 100 lb bag of tar sand can be shipped to the home of every Canadian who wants one to do with as they please. As for being "exploited" by "Big Oil", my brother, who works in the oil patch has in turn "exploited" "Big Oil" over the years to the tune of a two storey house, maintenance for a wife, four children and several dogs, cats and hamsters, cars, minivans, vacations and a pension. Numerous others have done the same. Given a choice between the exploitation and the bags of tar sand delivered to the basement, I as a low tax paying Albertan will take the exploitation thank you very much. The fastest way to kill the economy out here will be to morph overnight into another tin pot, business unfriendly jurisdiction in which contracts and government business agreements are worth less than the toilette paper in the washrooms. That's not to say it won't happen. I saw it before with the NEP. Only this time, I've got a wad of cash to clean up on some cheap foreclosed houses.





Re: Big oil, big money etc. We need to get rid of the term "oil," and use "kilowatts." The word "oil" conjures thoughts of a thick, gooey liquid that sticks to your Carhart coveralls or your garage floor. A liquid that spews smoke into the atmosphere when ignited, and makes Calgary oil men greedy and rich.
One US gallon of heavy diesel equals 40 Kilowatt hours. I don't know what a gallon of crude works out to, but a metric tonne of Fort McMurry crude works out to approx. 11,700 Kilowatt hours of energy. For you English chaps, One horsepower hour=.75 Kilowatt hours.
Kilowatts can always be re-converted back to any other form or source of energy.
A lot of the negative attitude towards oil companies is generated by the CBC and Radio-Canada. Have you ever noticed how they always use film footage of the Fort Mac refineries that was shot in sub zero weather. In reality, what you see going up into the atmosphere is water vapour. The film does however tickle the fanny of the "Suzukian Cult."
They (CBC-R-Canada) do the same when they film the power stations at Estevan and Coronach. In sub-zero weather, you can see the stack on the power station at Coronach from 60 miles away. On a warm day, no visible smoke is emmitted.

[Lifer]

"IF the pioneers and explorers and risk takers and gold panners had all been told, "go ahead, dig, drill and explore if you want to take the risk...but what ever you find...what ever you gain...THAT, you must remember belongs to everyone"!!!"

I respect those pioneers and am thankful that they have come to this country and have helped develop it into what it is today. And we are talking about today not yesterday.


The report states that "Albertans own the resources" do you agree with this statement?
Does this mean that the knowledge and effort to develop this great resource belongs to all Albertans?

"Fair" does need to be defined. Is it fair that Alberta's "METR" (marginal effective tax rate) as defined by the report is lower then the U.S?

Is it fair that the committee used for the royalty review was slanted towards business?

Is it fair that what they put out as minimum changes will be compromised on?

Is it fair that ones fear of government waste can drive them?("Funnel more throough the government and watch the abuse !!! ").

A balance of respect needs to be found.

[ivbinconned]

"And we are talking about today not yesterday."

Rubish!!

People may change....but

Principles NEVER change!

[carebear300]

I am from sask so you have to consider where this is coming from(behind the iron curtain) Fair is fair when it comes to royalties and we won't ever be able to determine what is really fair to satisfy everybody, but before you people in alberta get carried away this royalty bit remember what happened in saskatchewan fifty years ago, we had a premier that told the oil companies that the people of saskatchewan would determine how and when the oil would be developed and with that one statement the oil companies all pulled out and moved to alberta. So a friendly warning be careful how you treat the goose that laid the golden egg.

[ivbinconned]

New royalties will end Alberta's boom

Start of a new anti-oil industry era?

Claudia Cattaneo
National Post
Thursday, October 25, 2007

This is not Alberta's finest hour.

Premier Ed Stelmach rolled out a new deal yesterday on oil and gas development, the mainstay of his economy and Canada's biggest spender, that is sure to deflate a phenomenal boom and redefine the province's image. In Calgary, the mood was somber among big players and small. The new terms re-enforce the message that even in the country's top oil producing province, this is a new anti-oil industry era.

Under the new royalty framework, which will come into effect in barely a year, government take on oilsands projects will increase to a usurious 65%, from 47%, at today's oil prices, dramatically reducing the incentive of gambling billions of capital on projects in one of the most challenging regions of Canada, northeastern Alberta. Oilsands projects, including those already up and running, will start paying the public purse even before recovering their investment at rates as high as 9%, rather than the current 1%, and after investment is recovered, at a rate of up to 40%, from the current 25%, depending on oil prices.

Under the new policy, the province appears to have has shrugged off its potential to be a global energy leader and opted instead for mediocrity, bigger government and an adversarial relationship with the sector that has lined its pockets.

It's a deal that places Alberta alongside the hydrocarbon-rich Banana Republics of this world - places like Kazakhstan, Venezuela and Ecuador - where deals are ripped up and promises broken.

To those in the private sector who were willing to move mountains to turn low-grade oilsands deposits into highly coveted oil supplies to meet the world's energy needs, the new framework will feel like a slap in the face.

Those outside Alberta - from oil companies to pension funds - that were invited not long ago by the previous government of Ralph Klein to partake in the development of its energy riches, will take note that this is government that can't be trusted. In an egregious move, the new framework says existing legal agreements will be renegotiated, suggesting possible legal battles between the province and the two companies that pioneered the oilsands business, Suncor Energy Inc. and Syncrude Canada Ltd. There will be no grandfathering, which means the new rules will spread the pain equally among all players.

Energy consumers will also feel the hit. Canada's oilsands are one of the few places globally that can produce more oil. With the government demanding a bigger share of an already economically challenged business, supply growth will not be as aggressive as planned, pushing oil prices even higher.

The natural gas side of the business, which is already feeling pain in Canada, was done no favours in this process and supplies could fall even more than under current projections.

So what prompted Canada's overachieving province to burst its own balloon? Albertans became convinced that they were getting ripped off by Big Oil, that development was overheated, that they could stand to benefit more from high oil prices. The issues blossomed from a lack of understand of the existing royalty regime, and Mr. Stelmach's milked the misconceptions to score political points.

The premier, a farmer from Northern Alberta, showed little appreciation for the implications of his actions, suggesting the sector will continue to thrive.

Now the ball is in the oil and gas industry's court. Will it follow through with its threats, or will it go back to work?

The first reviews are damning. Rick George, chief executive of Suncor, a company that rarely enters the fray, said the changes "are substantial and could have a significant impact on industry economics. Imperial Oil Ltd. said "these are substantial changes to the royalty structure and will result in much higher costs."

Glen Schmidt, CEO of oilsands startup Laricina Energy Ltd, said: "Clearly the government has increased its take, clearly it has an impact on economics, and it may have a secondary impact on our cost of capital, which has an impact on our ability to invest."

One thing is certain: Oil companies are ruthless operators. When faced with an adversarial government, they sit it out until conditions improve. It wouldn't be surprising if they took action just to make the point.