Property tax concessions have cost N.B. nearly $380M over 40 years
CBC News investigation examined tax deals that lighten the tax load for certain businesses
By Robert Jones, CBC News
Posted: Dec 12, 2016 5:50 AM AT
Property tax concessions: What you need to know
2:30
Robert Jones
Up to $3.5 billion worth of property in New Brunswick enjoys
some kind of special tax treatment, a tradition of concessions that has
cost the province an estimated $380 million, plus interest, over nearly
four decades, a CBC News investigation shows.
The investigation into special tax deals was launched after Premier Brian Gallant challenged the public during a call-in radio show to help him identify deals that were "not equitable."
Tax exemptions and discounts explored by the CBC include multimillion dollar breaks on forest properties, farmland, petroleum sites and other facilities. In some cases, the tax breaks have stayed in place long after their original purpose became irrelevant.
This year, the tax breaks will cost the province an estimated $24 million.
That amount includes a seldom-mentioned $6.5 million provincial property tax exemption for Irving Oil's Canaport LNG properties.
CBC News has confirmed the Gallant government is allowing that
exemption to continue even after it fully repeals a Saint John municipal
property tax deal at the same site.
"The repealing of the LNG Act has no effect on the provincial property tax exemption," Nichole Bowman, a spokeswoman for Service New Brunswick, said in an email.
"The LNG facility will still be eligible for exemption of provincial tax revenue."
The other tax deals looked at by CBC News include:
The tax deals are so deeply rooted in the politics of New Brunswick
that none were seriously challenged during the Gallant government's
strategic review of spending last year that was meant to place all
government programs under a microscope.
Finance Minister Cathy Rogers said it was too big a task, and her department has recently begun looking at all special government tax deals.
"We decided we needed to do a more comprehensive review," she said.
"We are looking at this [now]."
Peter Hyslop, a Hartland-based lawyer, said one of the most generous
of the tax deals, the 38-year-old program that forgives provincial
property taxes on farm property, would trigger major political trouble
for anyone who tried to undo it.
"I think you'd have a hard time electing that party up and down the [St. John River] Valley," Hyslop said.
"I expect there would be a pretty significant uproar."
Devised in 1978, the program allows farm owners to defer provincial property tax on land and farm buildings for 15 years, at which point, if the land is still in agricultural use, the debt is forgiven.
A total of $129.9 million in farmland property tax has gone uncollected by the province since the program began.
This year, hundreds of agricultural businesses used it to avoid paying provincial tax on nearly $600 million worth of property including the multi-billion-dollar Florenceville company, McCain Foods, which sheltered at least $11 million of its farmland and buildings from taxes inside the program.
Even larger than that are property tax concessions for owners of forestland.
About three million hectares of forest is owned privately in New Brunswick — an area five times the size of Prince Edward Island. J.D. Irving, Ltd., alone owns 725,000 hectares of that.
Adjusted for inflation, taxes on timberland in New Brunswick are now less than half what they were in 1966, following a series of assessment freezes over 50 years, including the last 23 years in a row.
For tax purposes, forest properties are deemed to be worth $100 per hectare and have been since 1994 even though the same properties sell on the open market for several times that.
It produces heavily discounted property tax bills, and even some who benefit from it, like Gray Rapids Timber co owner Carl Faulkner wonder if it's too generous.
"I think about that all the time and I really can't come up with the right answer," he said. "I honestly can't."
Last December, Gray Rapids partly sold and partly donated 853
hectares it owned along the Bartholomew River near Blackville to the
Nature Conservancy of Canada.
The land was assessed by the province — and taxed — as being worth $85,300. The Nature Conservancy had it independently appraised before the sale for $950,000.
As a sign of how stubborn tax deals can be to dislodge once granted, CBC News also looked at a 1980 tax exemption granted on crude oil storage tanks and pipelines attached to the Irving Oil refinery.
It was awarded largely to help the company survive a worldwide oil crisis that began in 1979, but the arrangement was left undisturbed after the troubles resolved themselves in the mid-1980s.
Originally valued at between $400,000 and $500,000, the province will not say exactly what the crude oil tank and pipeline exemption is worth now, only to acknowledge it is "substantially more" than in 1980.
On the call-in show that led to the CBC investigation, Gallant did
not define what kind of tax deal he would consider to be "not
equitable." However, the various tax deals and concessions in place
contrast sharply with property taxes paid by those without special
treatment.
Keith Brideau has helped revive a number of old buildings in downtown Saint John and they're taxed at some of the highest commercial property tax rates in Canada, about 40 per cent of them levied by the province.
Brideau would like to see the entire property tax system reviewed, deals and all.
"When something has been around for a long time it tends to stay the same," he said.
"I think we have to challenge the existing system."
Edited by Connie Camp
Packaged by Daniel McHardie
Video by Paul Hantiuk and Earl Cabuhat
The investigation into special tax deals was launched after Premier Brian Gallant challenged the public during a call-in radio show to help him identify deals that were "not equitable."
Tax exemptions and discounts explored by the CBC include multimillion dollar breaks on forest properties, farmland, petroleum sites and other facilities. In some cases, the tax breaks have stayed in place long after their original purpose became irrelevant.
This year, the tax breaks will cost the province an estimated $24 million.
That amount includes a seldom-mentioned $6.5 million provincial property tax exemption for Irving Oil's Canaport LNG properties.
CBC News investigated property tax discounts and exemptions given to businesses and sectors, some dating back 40 years. (CBC)
"The repealing of the LNG Act has no effect on the provincial property tax exemption," Nichole Bowman, a spokeswoman for Service New Brunswick, said in an email.
"The LNG facility will still be eligible for exemption of provincial tax revenue."
The other tax deals looked at by CBC News include:
- A 23-year freeze on the assessment of more than $2 billion worth of privately owned timberland that causes forest properties in New Brunswick to be undervalued for tax purposes by as much as 90 per cent.
- A tax deferral program on agricultural land that has allowed owners to postpone — and ultimately not pay — $129.9 million in provincial property tax over the last 38 years.
- A property tax exemption on crude oil storage tanks and pipelines attached to the Irving Oil refinery granted in response to the 1979 oil crisis that has been allowed to continue for decades after the crisis ended.
- Three other property tax exemptions for New Brunswick ports, airports and railway right of ways that have expanded to cost the province triple the amount originally estimated.
Finance Minister Cathy Rogers says it was too
big a task for the province's program review, but her department has
recently begun looking at all special tax deals. (CBC)
Finance Minister Cathy Rogers said it was too big a task, and her department has recently begun looking at all special government tax deals.
"We decided we needed to do a more comprehensive review," she said.
"We are looking at this [now]."
Farmland tax forgiveness
A program created in 1978 allows farm owners
to defer provincial property tax on land and farm buildings for 15
years, at which point, if the land is still in agricultural use, the
debt is forgiven. (CBC)
"I think you'd have a hard time electing that party up and down the [St. John River] Valley," Hyslop said.
"I expect there would be a pretty significant uproar."
Devised in 1978, the program allows farm owners to defer provincial property tax on land and farm buildings for 15 years, at which point, if the land is still in agricultural use, the debt is forgiven.
A total of $129.9 million in farmland property tax has gone uncollected by the province since the program began.
This year, hundreds of agricultural businesses used it to avoid paying provincial tax on nearly $600 million worth of property including the multi-billion-dollar Florenceville company, McCain Foods, which sheltered at least $11 million of its farmland and buildings from taxes inside the program.
Timberland tax concessions
Last December, Gray Rapids partly sold and
partly donated 853 hectares it owned along the Bartholomew River near
Blackville to the Nature Conservancy of Canada. (Nature Conservancy of
Canada)
Even larger than that are property tax concessions for owners of forestland.
About three million hectares of forest is owned privately in New Brunswick — an area five times the size of Prince Edward Island. J.D. Irving, Ltd., alone owns 725,000 hectares of that.
Adjusted for inflation, taxes on timberland in New Brunswick are now less than half what they were in 1966, following a series of assessment freezes over 50 years, including the last 23 years in a row.
For tax purposes, forest properties are deemed to be worth $100 per hectare and have been since 1994 even though the same properties sell on the open market for several times that.
It produces heavily discounted property tax bills, and even some who benefit from it, like Gray Rapids Timber co owner Carl Faulkner wonder if it's too generous.
"I think about that all the time and I really can't come up with the right answer," he said. "I honestly can't."
Carl Faulkner, the co-owner of Gray Rapids,
says he wonders if tax breaks for forest properties are too generous.
(Nature Conservancy of Canada)
The land was assessed by the province — and taxed — as being worth $85,300. The Nature Conservancy had it independently appraised before the sale for $950,000.
As a sign of how stubborn tax deals can be to dislodge once granted, CBC News also looked at a 1980 tax exemption granted on crude oil storage tanks and pipelines attached to the Irving Oil refinery.
It was awarded largely to help the company survive a worldwide oil crisis that began in 1979, but the arrangement was left undisturbed after the troubles resolved themselves in the mid-1980s.
Originally valued at between $400,000 and $500,000, the province will not say exactly what the crude oil tank and pipeline exemption is worth now, only to acknowledge it is "substantially more" than in 1980.
Commercial tax deals 'not equitable'
Keith Brideau, a Saint John-based developer,
says he would like to see the entire property tax system reviewed, deals
and all. (CBC)
Keith Brideau has helped revive a number of old buildings in downtown Saint John and they're taxed at some of the highest commercial property tax rates in Canada, about 40 per cent of them levied by the province.
Brideau would like to see the entire property tax system reviewed, deals and all.
"When something has been around for a long time it tends to stay the same," he said.
"I think we have to challenge the existing system."
Annual tax on N .B. property per $100,000 in market value (CBC)
Packaged by Daniel McHardie
Video by Paul Hantiuk and Earl Cabuhat
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David Raymond Amos
If anyone wishes to recall
the Liebranos hired my Father, Max Amos to be "Supervisor of Taxation"
for the Province of New Brunswick in 1967 until his took sick and died
of cancer in the early eighties. My Father was quite a little
firecracker and he did not back up from a fight with any big bully if he
was certain he was on the right side of the matter.
I remember my Father talking of many battles with the Irving Empire about paying their fair of taxation in a timely fashion. That said does CBC or anyone even recall why his wild child namely me did not hesitate to sue three Secret Agents of the Yankee IRS in 2002? Better yet how about why I preparing a law suit against their cohorts Revenue Canada? Here is one word a hint about one issue that Trump, Obama and Prime Minister Trudeau "The Younger" are well aware od aware
Lets just say that apple does not fall too far from the tree N'esy Pas Mr Jones?
I remember my Father talking of many battles with the Irving Empire about paying their fair of taxation in a timely fashion. That said does CBC or anyone even recall why his wild child namely me did not hesitate to sue three Secret Agents of the Yankee IRS in 2002? Better yet how about why I preparing a law suit against their cohorts Revenue Canada? Here is one word a hint about one issue that Trump, Obama and Prime Minister Trudeau "The Younger" are well aware od aware
Lets just say that apple does not fall too far from the tree N'esy Pas Mr Jones?
David Raymond Amos
@David Raymond Amos FYI That one word is FATCA
Very effective communication written by you. People searches ends here and they find what they looking for. Singapore property lawyer
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