Pulp friction: Property taxes on large mills under review
Edmundston alone lost more than $700K in tax revenue after the local mill was reassessed
· CBC News · Posted: Sep 20, 2019 5:30 AM AT
The Twin Rivers pulp mill in Edmundston was one of six mills in the province to see its property assessment reduced in 2013. (CBC)
New Brunswick municipal politicians are hoping a property assessment review underway of the province's six pulp and paper mills will restore some of the $5.9 million in property tax reductions won by the facilities five years ago that caused financial problems in several communities.
"As you can imagine, it was significant," said Edmundston Mayor Cyrille Simard in an email to CBC News about the effect the 2014 tax changes had in his community.
Edmundston lost just over $700,000 in annual tax revenue when the province slashed the assessed value of the Twin Rivers pulp mill by 58 per cent late in 2013 for the 2014 budget year.
Twin Rivers was one of six New Brunswick pulp and/or paper mills that received significant property assessment reductions from the province during what were acknowledged to be difficult economic times in the industry.
Edmundston Mayor Cyrille Simard said the lost tax revenue had a 'significant' impact on the town. (CBC)
But international markets have generally improved since then, and during legislature committee hearings into industrial property taxes earlier this month Service New Brunswick officials acknowledged they are re-looking at the value of the pulp and paper mills and will make changes in the assessments next year if warranted.
"We are doing a reinspection of all these pulp mills again," said Stephen Ward, the executive director of property inspection services for Service New Brunswick.
"They are complex properties. It takes us two to three years to actually do a full complete reinspection. We do plan to have them fully valued for 2020 taxation year, but I can't speculate as to what is going to happen to the values of these properties at this point in time."
Millions in revenue lost
The pulp and paper mills, three owned by J.D. Irving Ltd., two by the AV Group and one by Twin Rivers were assessed to be worth $248.6 million as a group in 2012, according to information compiled by the website propertize.ca, and taxed by the province and their host municipalities on that amount.
The following year, Service New Brunswick cut their assessed value to just $117.9 million. That drove annual property taxes they had to pay from $11.2 million down to $5.3 million.
Much of the reduction was in property taxes paid to the province, but local communities were also affected. Two of the mills are in Saint John and one each in Lake Utopia, Nackawic, Edmunston and Atholville.
Nackawic, which lost $450,000 in revenue, raised property tax rates four per cent to deal with the shortfall. In Atholville, the village budget lost $360,000 and council increased property taxes 10 per cent in response.
The Village of Atholville raised its municipal tax rate 10 per cent after the local mill's property assessment was reduced. (Colin McPhail/CBC)
Saint John lost $1.5 million in tax revenue from the changes and city councillor David Merrithew, who chairs the city finance committee, wants it back.
"I would hope the increase is meaningful. If [we] can get to [past] levels today, I'd probably be happy.
I don't know if that's going to happen," said Merrithew, who has been critical of Service New Brunswick for implementing the original change and questions whether it is independent enough to undo them.
"I mean, my hopes aren't that high."
Mill exports have increased
Service New Brunswick has defended its assessment cuts on pulp mills as necessary given serious competitive and financial pressures the industry was under back in 2013 and insists there will have to be evidence that has improved for it to raise values from current levels.
"Until we see those other indications, then the property assessment values will be will remain as is," Ward told MLAs during the hearings.
Earlier this year, Statistics Canada reported exports of "paper manufacturing" from New Brunswick, which includes exports from the pulp and paper mills, have increased every year since 2012.
It reported total exports from New Brunswick in 2018 were $1.28 billion, $307.8 million (31.5 per cent) more than in 2012.
Whether that meets Service New Brunswick requirements for a healthier industry is not known, but Simard said if pulp and paper mills are doing better, he would like to see it reflected in their property tax assessments.
"If there is evidence that the markets have improved since 2013, it should normally have an impact on the assessment of these properties," he wrote.
J.D. Irving says it pays enough property tax on its pulp mill in west Saint John. (Connell Smith CBC)
JDI, which owns three of the mills being reassessed, has been vocal through the summer that it pays enough property tax at current levels.
"New Brunswick pulp and paper mills pay more per unit of output than all other jurisdictions in eastern Canada, with the exception of Ontario," vice-president Mark Mosher wrote in an opinion piece in the Telegraph Journal in July about the company's property tax bills.
"New Brunswick, and Saint John in particular are not low cost property jurisdictions."
Mosher made a similar argument to MLAs at committee hearings two weeks ago.
18 Comments
Commenting is now closed for this story. David Raymond Amos
How dumb are we?
Bob Smith
Mills are one thing but how about the government stop the despicable practice of forestry companies who have no mills active in the province but are still cutting on Crown land as they retain their quota? That needs to stop NOW.
David Raymond Amos
Reply to @Bob Smith: No kidding
https://www.cbc.ca/news/business/nafta-panel-canadian-softwood-lumber-tariffs-1.5271821
Canada's softwood lumber industry hasn't harmed U.S. producers, NAFTA panel finds
U.S. now has 3 months to rethink tariffs imposed on Canadian softwood in 2017
A joint NAFTA panel has given the United States three months to rethink its tariffs on imports of Canadian softwood lumber.
The five-member panel of Canadian and American representatives says there is no evidence that Canada's softwood industry has harmed United States softwood producers.
The most recent softwood agreement between the two countries expired in the middle of the last federal election.
Eighteen months later the U.S. imposed a new round of import duties, arguing Canada unfairly subsidizes its softwood producers by underpricing lumber cut on government-owned land.
Canada has filed complaints under both NAFTA and World Trade Organization rules.
The Canadian industry is struggling with numerous mill closures and layoffs amid the tariffs, depressed prices from lower international demand and supply issues in Canada related to forest fires and pest infestations.
The five-member panel of Canadian and American representatives says there is no evidence that Canada's softwood industry has harmed United States softwood producers.
The most recent softwood agreement between the two countries expired in the middle of the last federal election.
Eighteen months later the U.S. imposed a new round of import duties, arguing Canada unfairly subsidizes its softwood producers by underpricing lumber cut on government-owned land.
Canada has filed complaints under both NAFTA and World Trade Organization rules.
The Canadian industry is struggling with numerous mill closures and layoffs amid the tariffs, depressed prices from lower international demand and supply issues in Canada related to forest fires and pest infestations.
https://www.cbc.ca/news/canada/new-brunswick/nb-property-tax-proposal-hearing-1.5271916
Irving Oil claims it's a myth company gets off easy paying taxes
Company pays highest tax bill of any refinery outside Alberta, says executive
· CBC News · Posted: Sep 05, 2019 4:45 PM AT
Saint John Harbour MLA Gerry Lowe speaks with Andy Carson from Irving Oil at the second day of hearings on a proposal to make heavy industry pay more property tax. (Jacques Poitras/CBC)
Corporations and business groups continued their attack Thursday on a proposal to extend property assessments and taxes to cover their machinery and equipment.
Irving Oil, which operates the largest refinery in Canada in Saint John, blitzed members of a legislative committee with a series of charts and tables designed to show them it's a myth that the company gets off easy paying taxes.
Irving executive Andrew Carson said the company has "the highest tax bill of any refinery outside Alberta" and is facing steep taxes on a number of fronts.
"New Brunswick is not a low-cost jurisdiction," Carson said. "We pay fairly high corporate income taxes, we have high personal income taxes, we have fairly high WorkSafe New Brunswick rates and we now have a fairly high carbon tax."
The legislature's law amendments committee is studying a motion by Saint John Harbour MLA Gerry Lowe to expand the assessment base and end or reduce exemptions.
Motion not binding
The plan already appears doomed. If passed by the full legislature, the motion is not binding on the Progressive Conservative government.
And Finance Minister Ernie Steeves declared yesterday that he has already made up his mind to oppose the measure. He said it would apply property taxes to farmers' tractors and ovens in pizzerias.
Charline McCoy and Miramichi Mayor Adam Lordon spoke on behalf of the Cities of New Brunswick Association.
Miramichi Mayor Adam Lordon responded to that claim during his appearance at the committee Thursday.
"That is not the case," Lordon said on behalf of the Cities of New Brunswick Association. "That is not what we're advocating for. I always think it's important to have a debate on the facts rather than throwing misinformation into the mix as well."
Meanwhile, Saint John Mayor Don Darling pushed back at suggestions that floating the idea is anti-industry or anti-business.
He said it stems from a realization that the municipal tax structure hasn't changed since the Equal Opportunity reforms in the 1960s, when cities weren't playing as large a role in the economy.
"The legislation we're dealing with is decades and decades old," he told reporters.
At the hearing, Darling repeated his call that the province hand over its portion of property tax revenue in the city to the municipality and eventually give it the power to tax industry directly.
Lower tax burden
Lowe's motion was inspired by a report prepared for Saint John city council in 2017 that examined taxing machinery and equipment.
The rookie MLA and former city councillor says the revenue would allow the city to lower the tax burden on residents, which might help slow the migration of city residents to neighbouring municipalities.
Irving Oil and the New Brunswick government squabbled for years over whether the company should get a property tax exemption for its storage tanks on the outskirts of Saint John. The exemption finally went into effect in 1980 and has stayed put. (CBC)
He has repeatedly cited the 800-acre Irving refinery as a potential source of new property tax revenue.
On Wednesday, Green Party Leader David Coon brought up a supposedly temporary 1980 law to exempt Irving's oil storage tanks from provincial property taxes, a measure still in place almost four decades later.
Carson said Thursday the exemption applies to only 10 per cent of the company's tanks at the refinery and its nearby Canaport facility.
"So the balance of our tanks [are] fully assessed, fully taxed municipally, provincially," he said. "They're not treated in a different way."
Carson urged the committee to take into account the company's other contributions to Saint John, including the property tax it pays on its other properties and its involvement in the community.
For the most part, Carson avoided being drawn into discussion about the Irving family's wealth.
Lowe asked him about corporate profits and whether the refinery makes "good money" from all the oil-based products it sells.
But Carson avoided being pinned down.
"It would vary through the year, in all honesty," he replied. "There are generally times in the year when certain products are in higher demand."
Later in the morning, Coon challenged the refrain from various business groups about New Brunswick's high tax burden putting new investment in the province at risk.
'Unlikely to invest'
When Sheri Somerville of the Atlantic Chamber of Commerce said businesses in the province are already overtaxed, Coon pointed to a 2016 Conference Board of Canada report that said New Brunswick had the second-lowest corporate tax burden in the country.
She said there have been new costs since then, including the federal carbon tax, that makes business owners "uneasy" and unlikely to invest.
"Would you not agree that if we have a sub-standard health-care system, that would be a barrier to new investment, to attracting business to New Brunswick? Or if we have a substandard education system or, God forbid, both?"
Somerville answered by calling for a broader tax review.
"There is no one silver-bullet solution that we can apply," she said.
Lordon also called for a broad tax review, even though the eight cities he was representing aren't opposed to Lowe's proposal.
"We're in support of a perhaps higher level of taxation on equipment and machinery, but we don't think that is enough," he said. "It has to be about more than that. It's got to be a lot broader."
Lordon said cities are playing a greater role in the province, with 91 per cent of New Brunswickers living within 50 kilometres of a city but most of them not contributing through taxes to the cost of city services they use.
He said cities need taxation powers to match their growing role as "regional hubs."
Lowe's proposal "would be one very small piece of one very large and complex puzzle," Lordon said.
"This is not going to create the broad systemic change that we desperately need in this province. Looking at only one piece in any way is not going to be enough."
88 Comments
Commenting is now closed for this story. David Amos
Welcome to the Circus
David Amos
Methinks some folks will be astounded by the fact that I agree with the Irving Clan on this issue However everybody knows they don't pay their fair share of property taxes Hence the title of this article incredibly funny N'esy Pas?
David Amos
Enjoy your weekend folks no doubt Mr Higgs won't N'esy Pas?
Danny Devo
There is always some great reason why they don;t pay proper taxes. What a sh&#-show this is.
David Amos
Reply to @Danny Devo: Of course
Lou Bell
Guess it's either the Con Irving option , or the SANB / Liberal option of spending waste on their own francophone / corporate contributors option. e.g Atcon / Franco phonie Games , etc.
David Amos
Reply to @Lou Bell: Cry me a river
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