Canada's corporate tax policy is very friendly. Universal healthcare and oil policies (lack of windfall tax) dating from back when oil was $8/barrel and no sunset clauses. Oil companies can even be structured as an income trust for the next little while, a vehicle designed as a tax-shelter for cyclical industries and income seeking investors. Unfortunately, as of 2008 big oil has successfully surpressed scientific research and successfully brainwashed policymakers and voters into believing climate change is not a major preventable negative externality. There are a number of environmental negative externalities and geopolitical ones, big oil can afford to pay for (most profitable industry on Earth) but isn't. These include ensuring non-competition for freshwater aquifers with cities, tailing pond cleanup, funding the inflation infrastructure costs of surrounding region....I look at healthcare policy and see how advanced it is because the tobacco and alcohol lobbies are now minor in the developed world. I look at environmental policy; big oil presently runs these policies in Canadian and American federal governments.
Until these issues are addressed I'm treating big oil as a sindustry. Same for tobacco and alcohol. Wouldn't mind paying healthcare costs when I buy beer. High R+D industries are good industries. A UK BERR report titled "The 2007 R+D Scoreboard" says the R+D intensity of biotech and technology companies are high (translating their industries calassifications into RoB's). Private R+D returns around 17% annually, I read somewhere. I'm also assuming railroad/bus companies, food (not feed/ethanol) grain companies, farm machinery manufacturers, greenhouse manufacturers, and fertilizer manufacturers, are good industries. I'm tacking on soon to be in demand environmental services as a good industry. Probably some R+D intensive telecoms and service industry companies I've missed.
The Jul/Aug 2008 RoB magazine lists 574 Canadian companies publicly traded and in the black for 2007. Oil producers, servicers, integrateds and pipelines, made $30 200 000 000. Good industries made $7 301 000 000. That is -$22 899 000 000 added together at a 2007 corporate tax rate of 22.12%. Assuming no deductions and losses, each % drop in the corporate tax rate is $1.0352169B in corporate sindustry profits lost to public coffers. Not condemning oil, is praise of nationalization, just accounting the need for dirty industries to pay extra to cover societal externailities. RoB doesn't distinguish between coal and hydro utilities...
that profit lost goes in the red of an externality budget. ex) raising the corporate tax rate from 19% to 20% is accounted as $1.0352169B in the black, to be modified by deficit/surplus multiplier. If I were an oil CEO earning record profits in a non-nationalized jurisdiction I'd go out of my way not to subvert science or public policy. If I were a policymaker I'd ensure oil pays the costs for a sustainable infrastructure and economy after the bust. But I'm neither.
