Bill would give Saint John long-sought room taxing oil refinery, other heavy industry

·3 min read
The Irving Oil Refinery is paying $2.68 million in property tax to Saint John this year.  It's the largest heavy industrial property in the city. (Roger Cosman/CBC News - image credit)
The Irving Oil Refinery is paying $2.68 million in property tax to Saint John this year. It's the largest heavy industrial property in the city. (Roger Cosman/CBC News - image credit)

The New Brunswick government has introduced legislation to give municipalities the ability to set property tax rates specifically for heavy industry beginning next year, but with limits.

The change has been advocated by the City of Saint John, but could affect a number of communities around New Brunswick that host industrial plants.

In a one-minute presentation at the legislature on Tuesday afternoon, New Brunswick Finance Minister Ernie Steeves introduced "an Act Respecting Heavy Industrial Property."

Steeves said it would "establish a new heavy industrial property classification" that local governments can use for setting specific tax rates.  

According to provisions in the legislation, a municipality would be free to raise property tax rates on heavy industry by as much as 13.5 per cent from current levels without having to change rates on other property owners in the community by the same amount, as is now required.

Jacques Poitras/CBC
Jacques Poitras/CBC

Municipalities could also lower rates on industry as much 6.7 per cent under the same conditions.

According to the legislation, the heavy industry designation will be applied broadly and include the oil refinery, pulp and paper mills, large sawmills, power plants, mines, the LNG and crude oil terminals and other large manufacturing operations.

The legislation specifically exempts wind and solar farms, but makes no mention either way of food processing plants.

"This will provide increased financial flexibility to local governments and rural districts," said Steeves.

Long time coming

The City of Saint John has been pushing for more authority over how it sets local property taxes, and Mayor Donna Reardon applauded the change.

"It's a great thing," said Reardon.

"We're looking for more autonomy and more flexibility when it comes to taxes."

Two years ago, Saint John estimated about $12 million of the $125.8 million it raised in property tax revenue at the time came from heavy industry. That means charging the maximum allowed under the government's proposed changes could raise an additional $1.5 million in revenue for the city.

Ed Hunter / CBC News
Ed Hunter / CBC News

Under current rules, New Brunswick municipalities are only allowed to set a single property tax rate for the year. That rate fixes what residential households pay, and under provincial rules business properties in the community are then automatically charged a tax rate 1.5 times higher.

That caused problems this year when municipalities wanted to cut tax rates for homeowners struggling with large property assessment increases, but had to provide them for commercial, government and industrial properties by default as well.

Under proposed changes for next year, municipalities will be able to independently set three tax rates, including one for residential properties, one for business properties and one for heavy industrial properties.

For the first time, rates set for business and industrial properties can be different from each other and won't automatically be fixed at 150 per cent of residential rates. However, they must fall in a range between 140 and 170 per cent of a community's residential rate.

Hadeel Ibrahim/CBC
Hadeel Ibrahim/CBC

Initial reaction from manufacturers was muted.

J.D. Irving Ltd., which owns a number of manufacturing facilities around New Brunswick that will be subject to the new tax category, did not immediately respond to a request for comment.

The province noted that not all affected manufacturers may know they will be subject to a new category.

"The owners of all potentially affected properties will be notified in a letter from the government," it said in a news release.

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