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An Evaluation of the Exploration Tax Credit


    (Department of Finance, Canada)


    (Department of Finance, Canada)

The paper evaluates the economic and fiscal impacts in Canada of the exploration tax credit introduced in December 1985. It has examined such issues as the extent of exploration directly attributable to the credit, the cost of the credit to the federal government in forgone tax revenue, the impact of the credit on findings of undiscovered resources, and the degree to which the credit has accomplished its original objectives. The analysis concludes that the exploration tax credit has provided little stimulus to exploration activity in the oil and gas industry due to the fact that exploration costs are a small percentage of overall costs in most offshore oil and gas projects, offshore oil and gas projects are highly risky, and the exploration tax credit is moderate and taxes are only one of the factors for budget exploration by many companies. Moreover, the incentive seemed not to be introduced solely out of concern about exploration in Canada. Providing assistance to accompany the phasing out of the Petroleum Incentives Program was indeed a main objective.

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Paper provided by JDI Executive Programs in its series Development Discussion Papers with number 1991-14.

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Length: 134 pages
Date of creation: Jan 1991
Date of revision:
Handle: RePEc:qed:dpaper:173
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  1. Robin Boadway & Neil Bruce & Ken McKenzie & Jack Mintz, 1987. "Marginal Effective Tax Rates for Capital in the Canadian Mining Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 20(1), pages 1-16, February.
  2. Glenn Jenkins, 1973. "The Measurement Of Rates Of Return And Taxation From Private Capital In Canada," Development Discussion Papers 1973-02, JDI Executive Programs.
  3. Glenn P. Jenkins, 1981. "The Public-Sector Discount Rate for Canada: Some Further Observations," Canadian Public Policy, University of Toronto Press, vol. 7(3), pages 399-407, Summer.
  4. Glenn Jenkins, 1977. "Capital In Canada - Its Social And Private Performance 1965-1974," Development Discussion Papers 1977-06, JDI Executive Programs.
  5. David F. Burgess, 1981. "The Social Discount Rate for Canada: Theory and Evidence," Canadian Public Policy, University of Toronto Press, vol. 7(3), pages 383-394, Summer.
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