Catalyst, North Cowichan applaud elimination of PST on electricity

Plans by the province to eliminate the provincial sales tax on electrical sales to businesses are being welcomed by Catalyst Paper

Plans by the province to eliminate the provincial sales tax on electrical sales to businesses are being welcomed by Catalyst Paper, which operates a pulp and paper mill in Crofton.

Catalyst spokesman Len Posyniak said the move, which was announced in the provincial budget on Feb. 21, is a “strong step forward” to protect and support jobs in B.C.’s pulp and paper sector.

The Liberal government has committed to reducing the PST on electricity from seven per cent to 3.5 per cent as of Oct. 1, 2017, and the PST will be fully exempt on electricity as of April 1, 2019.

“This is good news at a critical time for our industry and for Catalyst and the workers and communities who depend on our operations,” said Posyniak.

“This tax change will help improve our global competitiveness and create better hosting conditions for re-investment in B.C.”

B.C. is currently the only jurisdiction in North America that levies a sales tax on electricity and other sources of energy used by business.

Catalyst, other forest companies and several municipalities on the Island have long claimed the PST charge puts B.C.’s energy-intensive industries at a competitive disadvantage.

The B.C. Commission on Tax Competitiveness recommended the policy change in the lead up to the budget.

The price of power has surged in recent years, and the commission has determined that charging PST on electricity has left large industrial power users in B.C. in an unfair competitive position.

Just last week, the Municipality of North Cowichan joined eight other municipalities from across B.C. in asking the province to exempt some of their major industrial users of electricity, including the Crofton mill, from the PST.

North Cowichan mayor Jon Lefebure said the government’s plan to eliminate the PST on electricity “very encouraging”.

“It’s a very logical move,” he said.

“It will go a long way to make local pulp and paper and sawmills more competitive.”

Finance Minister Mike de Jong said B.C. is in such strong financial shape that it can now afford to scrap the PST on energy sales, as well as the Medical Service Plan premiums, in incremental stages.

Phasing out the PST on power will cost the province approximately $164 million in annual revenues.

But the strategy is dependent on the Liberals winning the provincial election in May.