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Baird won't comment on oil sands 
tax break

[PoliticsWatch updated 4:10 p.m., February 8, 2007]

Environment Minister John Baird.

OTTAWA  — Environment Minister John Baird offered no comment on a contentious tax incentive for Canada's oil sands while appearing before a Commons committee on Thursday.  

Pressure has been growing in recent weeks on the government to end the accelerated capital cost allowance, which allows oil companies to write off all of the capital expenses they incur before they start paying income taxes.

NDP Leader Jack Layton has said he wants the government to stop providing the tax write-offs in exchange for NDP  support of the government's Clean Air Act. 

During Baird's appearance before the special Commons committee on the Clean Air Act on Thursday, NDP MP Nathan Cullen asked Baird if he would "end the perverse subsidies to the tar sands." 

Baird responded by saying, "With respect to taxation of the oil industry that will be another issue for (Finance Minister Jim) Flaherty to speak to."

Baird's lack of a ringing endorsement of the current policy will no doubt continue to rattle the nerves of Canada's oil industry. 

On Thursday morning, the Globe and Mail reported it obtained a copy of a letter to Indian Affairs Minister Jim Prentice from the chair of the Canadian Association of Petroleum Producers in which the association defends the accelerated write off. 

Prentice is the chair of a special cabinet committee dealing with the implementation of the Clean Air Act. 

Baird, Prentice and Natural Resources Minister Gary Lunn are scheduled to meet with oil executives in Calgary on Friday. 

The letter is being viewed in Ottawa as a sign that the industry is concerned the minority government will bow to political pressure and end the tax break. 

"Now that I've seen the oil executives start to show up in the media claiming that there are no tax breaks and they aren't subsidized, that gives me cause to believe that they're actually starting to realize that this thing could be gone," Cullen told reporters after the committee meeting. 

"The gravy train is over and Canadian taxpayers are not going to subsidize them any more."

In question period, Bloc Quebecois Leader Gilles Duceppe pressed Prime Minister Stephen Harper on the issue.  

"Given the tax breaks that are given to the oil companies and given the fact that they represent some $3 billion and will reach an even greater amount ... shouldn't that money not be used for combating global warming?"

Harper made no commitment on the tax breaks, but noted that the sector was already affected by his government's decision last year not to tax income trusts. 

The Bloc is leading an effort on the Commons finance committee to have oil sands executives to appear to testify about the tax break. 

"We want (an) explanation," Duceppe said. "It's a lot of money -- $3 billion between 2005 and 2008."

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