Province retracts $580K property-tax levy on Irving crude-oil tank farm

Provincial property taxes of nearly $600,000, levied on Irving Oil's deep-water crude-oil tank farm back in March, was an error that did not signal an end to a four-decade-old tax exemption on the site, according to the New Brunswick government.

Instead, the exemption has been reactivated and the tax bill retracted.

In a series of emails explaining why provincial property-tax amounts charged to the tank farm appeared in March, but have since disappeared, the director of communications for Service New Brunswick said the property briefly lost its tax exemption classification in an inadvertent internal computer incident. 

"There was an activity to the property account that reset the classification," wrote Jennifer Vienneau.

"It has been manually reset to the original classification."

In March, the province issued property tax bills to all landowners in New Brunswick and for the first time in 42 years, it charged Irving Oil for provincial property taxes on a number of parcels that make up its Canaport crude-oil terminal.

All commercial and industrial properties in New Brunswick, from corner stores to nuclear plants, pay two property taxes, local and provincial, unless specifically exempted by legislation.

The tank farm pays full municipal property taxes to Saint John, but in 1981 it was awarded an exemption from paying provincial property tax by the former government of Richard Hatfield.

The facility sits on Mispec Point, next to Repsol's LNG terminal at the edge of the Bay of Fundy.  

It has a storage capacity of six-million barrels and receives shipments from ocean-going tankers that arrive from around the world multiple times each month. The tank farm feeds the crude to Irving Oil's Saint John refinery, about eight kilometres away by pipeline.

The property-tax exemption was meant to help Irving Oil weather a significant drop in North American petroleum consumption, caused by the 1979 oil crisis. Those troubles resolved themselves long ago, but the tax exemption has persisted.

In its most recent 2021 accounting of the cost of exempting Irving Oil's crude-oil tank farm properties from provincial property taxes, the New Brunswick Department of Finance valued it to be worth $674,929 to the company.  

However, since 2021, provincial tax rates on business properties in New Brunswick have been reduced, and the value of the exemption in 2023 is closer to $580,000.

According to the finance department, the exemption's purpose remains to "support the competitiveness of infrastructure that is important for economic development."

There have been calls for the exemption on the tank farm to be terminated in the past, but action has yet to be taken.

In 2016, then opposition leader Blaine Higgs said the exemption should be reviewed and potentially cancelled, since the crisis it was created to help Irving Oil survive resolved itself in the 1980s.

"A lot of policies in government start for a good reason, but they never end," said Higgs.

"There's no exit clause, so it just doesn't hit the radar again."

In 2018, the New Brunswick Green Party put the cancellation of the property-tax exemption on crude-oil storage tanks into its election platform, but has been unable to effect that change in the legislature.

In March, Green Party Leader David Coon applauded what appeared to be the end of the exemption, when Service New Brunswick began showing full taxes being charged at the site. He said he is disappointed to hear that has been undone.

"It's surprising," said Coon in an interview this week.  

"It seems unlikely they made a mistake, but maybe it was. It's time for Irving Oil to pay their fair share on all of their properties."

Irving Oil did not respond to a request for comment about the tax change and whether a property tax exemption at the tank farm is still required by the company.

Irving Oil does not publicly report its financial results, but in 2022 oil companies across North America posted record financial returns.

Refiners like Valero Energy Corporation, which operates refineries in both the U.S. and Canada, and PBF Energy Inc., which refines and sells petroleum into eastern U.S. markets, each reported pre-tax profits in 2022 close to $3,000 US per barrel of their refining capacities.  

Results like that, if duplicated by Irving Oil, would have produced more than $1 billion in pre-tax 2022 earnings.