Mayors advocate for provincial electricity tax break

City of Powell River mayor Dave Formosa is leading the charge to convince the provincial government to remove sales tax from industrial electricity usage.

Eight BC municipalities and cities, led by Powell River, sent a letter to premier Christy Clark and finance minister Mike de Jong earlier this month, reminding them that the recent provincial commission on tax competitiveness concluded that charging a seven-per-cent sales tax on power puts BC businesses at a disadvantage.

“The commission came to the same conclusion,” said Formosa. “BC is the only jurisdiction that charges sales tax on industrial power; it creates an unfair playing field.”

According to the letter from areas dependent on the forest industry, recent curtailments and mill closures around the province have “significantly impacted communities like ours, demonstrating that the competitive threat facing our local mills is real.”

BC Hydro’s industrial customers, Catalyst Paper Corporation among its largest, paid close to $160 million in provincial sales tax last year. As an industrial sector, pulp and paper producers provided $16 million, said Catalyst vice-president Len Posyniak.

Posyniak said Catalyst appreciates efforts of Formosa and other mayors in lobbying on behalf of its industry.

“It’s no secret that we’ve just finished going through recapitalization and the company has had some financial challenges, so it is a significant amount of money, especially if we could otherwise reinvest it in the company.”

Posyniak would not confirm the amount of sales tax the company pays on electricity, but it is estimated at roughly $9 million annually.

Catalyst is trying to move its operations, Powell River included, to new products and sustainable markets, said Posyniak.

“Having uncompetitive hosting conditions is an impediment to that pivot,” he said. “This tax reduces competitiveness.”

Formosa said he is confident the company, with its plans for new products, will be able to come around if provided with enough help.

“We are trying to make the mill viable; not just prolonging the inevitable,” said Formosa. “We’re doing as much as we can.”

The provincial government is expected to announce its 2017 budget on February 21.