TORONTO (miningweekly.com) – The province of British Columbia this week introduced its much-anticipated legislation for a new two-tier tax on net income from liquefied natural gas (LNG) facilities.

The legislation, which was originally announced in the provincial budget in February, introduced a two-tier income tax that would apply a minimum 1.5% ‘Tier 1’ tax on LNG profits before the recovery of capital investment costs and a 3.5% ‘Tier 2’ tax on LNG profits once capital payback had been achieved. The Tier 2 tax would rise to 5% in 2037.

The new rules would apply to income from liquefaction activities at, or in respect of, LNG facilities in the province for taxation years starting January 1, 2017.

Opposition parties slammed the legislation, tabled on Tuesday, pointing out that Premier Christy Clark’s Liberal-led government had slashed the original tax rate of 7% at least in half and reduced the province’s expected future revenue.

In her Throne Speech in February last year, Clark touted the creation of a British Columbia Prosperity Fund to hold expected revenue of more than $100-billion from LNG royalty streams over the next 30 years.

“The LNG tax legislation … was written by industry and for industry. It cuts in half the LNG tax the premier said was fair in the February 2014 Budget. Moreover, the new corporate income-tax credit and deductions for preconstruction costs will also cut into the public’s share that Christy Clark promised just eight months ago,” New Democrat spokesperson on LNG Bruce Ralston said.

LNG is natural gas (predominantly methane) that has been compressed to liquid form for ease of storage or transport.

British Columbia has captured the attention of large multinational companies and global investors who have proposed 18 LNG projects, now at various stages of development. Most of these projects are planned for north-west British Columbia, in communities such as Kitimat and Prince Rupert.

These projects are so significant that they represent the largest private-sector investment proposals in the province’s history, spurring billions of dollars in local infrastructure investment.