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Tax break on power proposed for Catalyst

Crofton mill. - Citizen file
Crofton mill.
— image credit: Citizen file

North Cowichan has joined eight other municipalities from across B.C. who are asking the province to exempt some of their major industrial users of electricity, including Crofton’s Catalyst pulp and paper mill, from the provincial sales tax.

The PST exemption was recently recommended to government by the BC Commission on Tax Competitiveness in the 2017 provincial budget.

The mayors are stating that the PST exemption would help protect and support forestry jobs, especially in communities hosting electricity-intensive mills, like the Crofton mill which employs more than 600 people. The mill manufactures pulp, paper and value-added wood products.

North Cowichan mayor Jon Lefebure said Catalyst, which pays approximately $11 million in PST on its electrical use in all its mills in B.C. each year, is the largest single consumer of electricity in the province.

“Catalyst has expressed these concerns before, including during the period the company was under credit protection in 2013,” Lefebure said.

“So a number of mill-town mayors and Catalyst are now working together to reduce this tax burden. B.C. is unique in North America in charging sales tax on hydro for these companies. In today’s world, pulp and paper companies are going out of business and are seeking level playing fields in their taxes to keep them competitive.”

The other B.C. communities asking for the exemption are Powell Rive, Quesnel, Vernon, Port Alberni, Port Alice, and the districts of Mackenzie and Taylor.

Lefebure said the impacts of the PST on electricity go well beyond Catalyst in B.C., and involve all sawmills and value-added forest companies in the province.

He said the recommendation by the BC Commission on Tax Competitiveness to move away from these taxes is encouraging for the mayors and the industry.

A statement from the Ministry of Finance acknowledged that the BC Commission on Tax Competitiveness has put forward a number of recommendations to drive economic growth and create jobs in B.C.

“Exempting electricity used by industry from PST was one of the ideas they put forward as a way to enhance competitiveness,” the statement said.

“The Minister of Finance is considering this proposal along with many other spending priorities as we prepare the upcoming balanced budget and longer-term fiscal plan.”

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