'Devastating impact': Saint John's tax proposals draw ire from manufacturers

'Devastating impact': Saint John's tax proposals draw ire from manufacturers

Reforms proposed by the City of Saint John to the property tax system would have a "devastating impact" on manufacturers trying to grow their businesses, an industry representative said Friday.

Joel Richardson, vice-president of the Canadian Manufacturers and Exporters for New Brunswick and Prince Edward Island, said a request to lift tax exemptions on industrial equipment would stifle investment in the region.

"If you add additional taxes on the private sector and they can't invest in machinery and equipment, we're going to have a devastating turn of events," Richardson said in an interview with Information Morning Saint John.

"A significant number of families rely on manufacturing for their livelihoods. If you start adding taxes … on the sector at a time when our economy is in a death spiral, it's contrary to being able to grow our provincial economy."

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On Monday, city councillors unanimously approved a request for tax reform after receiving a report by Jeff Trail, Saint John's city manager.

Among the proposed reforms is a tax on machinery and equipment, which alone would put the city in a surplus situation, said Trail.

However, Richardson said removing the exemption now in place would go against the city's mandate to grow its tax base.

"The only way to achieve growth and sustain our companies that create jobs and employ thousands is to do the opposite," he said.

"There's hundreds of … small businesses that support New Brunswick's larger industrial manufacturing supply chain, this is why going after machinery and equipment across the board makes no sense, because you will stymie the ability for the private sector to attract investment."

Challenges refinery comparison

Trail's report notes that two Alberta oil refineries in Strathcona County that combined are the same size as the Irving Oil refinery in Saint John pay five times as much property tax because their machinery and equipment are taxed.

Similar treatment in Saint John would allow residential property taxes to be cut between 33 and 48 percent with even larger reductions for other landowners, Trail estimates.

But Richardson argued the comparison isn't fair.

"Our equipment, our buildings and homes aren't worth as much as homes in Alberta … because Alberta, unlike New Brunswick, has seen record levels of investment in new construction and machinery equipment," he said.

"And a lot of investment has come from outside the province through the natural resource industry. New Brunswick hasn't experienced that."

Grim outlook

Saint John has been struggling financially after years of nearly flat assessment growth.

City managers have warned that a declining population and near zero assessment growth have created a grim financial outlook for 2018 and beyond.

Ten years ago Saint John had the largest tax base in the province but has since slipped to third. 

According to the New Brunswick Department of Environment and Local Government, Moncton now has $1.1 billion more taxable property than Saint John, with Fredericton $203 million ahead.

Finance minister said Cathy Rogers said on Wednesday she is "open to dialogue" with the City of Saint John about its financial problems but she's not open to immediate reforms of the property tax system.