Harmac pulp mill near Nanaimo: forest products companies are major users of electricity.

B.C. considers business sales tax relief

Finance Minister Mike de Jong considers giving up $160 million in provincial sales tax revenue added to business electricity bills

B.C. is the only place in North America that charges sales tax on business electricity bills, a cost the finance ministry is considering removing to help the struggling forest and mining industries.

The issue was identified in November when an expert panel on tax competitiveness reported back to Finance Minister Mike de Jong. It noted that the province takes in $160 million from provincial sales tax (PST) on electricity bills, part of a generally high-tax environment for business and investment in B.C. relative to the national average.

[See commission report below]

Last week, mayors of eight forest-dependent communities wrote to de Jong and Premier Christy Clark, asking for PST relief for lumber, pulp and paper producers in their communities.

“Communities in rural B.C. are not experiencing the same economic growth enjoyed in Lower Mainland communities,” wrote the mayors of North Cowichan, Quesnel, Vernon, Port Alberni, Mackenzie, Powell River, Taylor and Port Alice.

“Eliminating the PST on electricity for businesses is meaningful action you can take that would not only help the forestry industry and the jobs it supports, but will also benefit the mining industry and other energy-intensive job creators in our province.”

The finance ministry issued a statement Tuesday acknowledging that de Jong is “considering this proposal along with many other spending priorities as we prepare the upcoming provincial balanced budget and longer-term fiscal plan.”

Energy Minister Bill Bennett said the issue has come up over the years, but the Commission on Tax Competitiveness report has created a “unified focus” among groups including the B.C. Business Council, the B.C. Chamber of Commerce, the Vancouver Board of Trade as well as mining and forestry associations.

It would be a cabinet decision that would only be revealed when de Jong tables the provincial budget Feb. 21.

“Taking PST off the purchase of electricity would help pulp mills, would help the sawmills, would help the mines,” Bennett said Wednesday. “It would help small business, and B.C. is one of the only, if not the only jurisdiction that charges sales tax on purchase of electricity.”

The commission found that B.C.’s PST is an impediment to investment in machinery and equipment, which it found to be the third lowest of any Canadian province.

CommissionOnTaxCompetitiveness Nov 2016 by Tom Fletcher on Scribd

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