PCs, businesses rally against property tax changes for heavy industry

The proposal to end or reduce property tax exemptions for large industry in the province appeared dead on arrival Wednesday.

Just as two days of hearings on the issue were getting underway, Finance Minister Ernie Steeves told reporters that he opposes the concept.

"It's not a good bill," Steeves said. "I'm against it." 

He called the idea "a business crusher" that would hurt small businesses and farmers.

Minister fears for pizza makers

"It could be taxing farmers for the tractors they use every day. It could be taxing people in pizzerias. Their pizza ovens are going to get taxed."

While Steeves mistakenly referred to the proposal as a bill, it's actually a non-binding motion being studied during two days of hearings by the legislature's law amendments committee. 

Because the Progressive Conservative government lacks a majority in the house, the three opposition parties could pass the motion.

But the motion, essentially an expression of the legislature's opinion, doesn't have the same legal weight as legislation. And it appears the government has no plans to heed it if it passes.  

"New Brunswickers expect us as a government, whether we're a minority or a majority, to certainly make sure that we're making decisions that best reflect the interests of New Brunswickers," said Progressive Conservative Glen Savoie, the   Saint John East MLA .

"I believe this is regressive, I believe this would hurt New Brunswick businesses and the economy, and ultimately the province's ability to pay for the services that our taxes go toward."

Saint John Harbour Liberal MLA Gerry Lowe, who introduced the motion, acknowledged his proposal is unlikely to be enacted but said the two days of hearings were still important.

"All I wanted was dialogue and that's what I think these two days are going to bring," he said.

Lowe said that Steeves's claim about the impact on farmers was not true.

"That's bullshit," he said. "We're not talking about that. We're talking about heavy industry. We're not talking about machinery that moves, and he knows that." 

Extra revenue could help city

Lowe originally introduced a private member's bill to include heavy industry's machinery and equipment in their property tax assessments.

He said the extra revenue from large plants in Saint John would allow the city to reduce taxes for residents and reduce the number of people moving to outlying municipalities. 

But tax bills can only be introduced by governments, so Lowe withdrew his bill and brought the idea back in a motion to reconsider all property tax exemptions for large industry.

A who's who of corporations and business organizations was lined up to argue against the proposal at the hearings. 

Louis-Philippe Gauthier of the Canadian Federation of Independent Business compared the measure to having tax assessors enter a resident's house to add their furniture, appliances and big-screen televisions to their property assessment. 

"No citizen would allow that to happen, so why are we even considering it for businesses?" he told reporters. 

Unintended consequences

Provincial civil servants also warned that the proposed change could lead to unintended consequences.

Peter Kieley, the assistant deputy minister of finance for fiscal policy, said it would represent "a big change" for the assessment system, requiring expertise and training not available now in the province.

Municipalities that received a revenue windfall from adding equipment to assessments "would likely see reduced funding through the other formulas" for provincial funding, "so there's always that other shoe when we look at this from a property tax perspective."

No provinces from Ontario eastward tax equipment and machinery, and if New Brunswick decided to do it, it might reduce investment in the province, he said. 

"It's a competitive marketplace, and businesses, if they are taxed too high in one jurisdiction, will take their business elsewhere," he said.

Non-competitive

That argument was echoed by J.D. Irving Ltd., whose officials told the committee that their Saint John properties are not getting a break on property taxes when compared to plants in neighbouring provinces.

Irving Pulp and Paper vice-president Mark Mosher also said that with machinery and equipment making up 85 per cent of the value of some plants he runs, taxing them would make them "completely non-competitive." 

Two MLAs on the committee focused on one tax exemption in particular: a 1980 law that removed Irving Oil's Saint John storage tanks from the assessment system.

Green Party Leader David Coon said that law was a response to an oil crisis in 1979 and "clearly was intended as a temporary measure," yet it remains in place four decades later. 

People's Alliance MLA Rick DeSaulniers, whose party usually votes with the PCs, also suggested that the exemption be repealed.

When provincial officials told him it applies only to provincial property tax revenue and the City of Saint John receives tax revenue from the tanks, DeSaulniers said the province should repeal regardless and turn over the new revenue to the city.