New Brunswick: A $29M fight over big industry taxes

FREDERICTION – Glen Savoie is waving a yellow caution flag at New Brunswick's new Liberal government that promises to speed ahead with property tax reforms.

In particular, the Progressive Conservative opposition leader says Premier Susan Holt's Liberals must tread cautiously before giving all the tax revenues from industrial properties to municipalities, rather than to continue splitting the money with the provincial government.

With a new Liberal government in power, Saint John Mayor Donna Reardon is renewing her city's push for that money, arguing even big industry wants the change.

It would be worth about $29 million annually to Saint John and 32 other communities across the province with heavy industry, such as Moncton, Tracadie, Nackawic, Belledune and Richibucto.

"I've always said there's only one taxpayer," Savoie, who served as local government minister in the Higgs Tory cabinet, told Brunswick News. "Saint John is proposing that the province give up that tax room. That would cost the province $29 million or $30 million a year, which is significant.

"We need to have balanced conversations over what financial reforms need to look like, a more holistic approach."

The former local government minister knows if the province gives up $29 million in tax revenue, it means less money for public services that New Brunswickers have been clamoring for, such as hospitals overflowing with patients and schools burdened with portables. 

His own riding of Saint John East is at the heart of the debate.

It has some of the biggest industrial complexes in the province: the Irving Oil Refinery, NB Power's Bayside Generating Station, J.D. Irving's Irving Paper mill and Irving Wallboard plant, to name just a few.

But Savoie was careful to say he wasn't dead set against the proposal.

It simply has to be considered among dozens of other potential reforms that could see money shifted around, he said.

On the campaign trail, the Holt Liberals pledged to overhaul both the property assessment and property taxation systems.

Liberal Leader Susan Holt told officials at the Union of Municipalities of New Brunswick in early October she was committed to erasing a $200-million annual gap that had grown over the last 20 years or so between the amount of funding municipalities used to receive from the province, and what they get now. 

Notably, Holt said a new Liberal government would look carefully at the unique needs of municipalities, including the idea of providing a more generous share of industrial property taxes.

Aaron Kennedy, the former journalist and town manager who dethroned former Premier Blaine Higgs in his riding of Quispamsis, has been appointed by Holt as local government minister and responsible for Service New Brunswick, putting him in charge of the complicated and controversial file.

Reardon, meanwhile, is quick to point out that she has heavy industry in her corner when it comes to keeping 100 per cent of their property tax revenue in the city.

In Saint John's case, the extra money would boost the city's annual budget by about five per cent, a little over $9 million.

"Heavy industry has lobbied, with us, to keep their tax where it's created," Reardon told Brunswick News. "Because it would be good for them too."

The mayor said her city could do a lot of good with the extra money.

"It would support heavy industry, whether it would be better roads or gates at train crossings. Just imagine a sign saying, 'these improvements at Dominion Park Beach brought to you by such-and-such companies.' They'd love that."

She argued it was unfair that communities with big smoke pipes generate so much tax revenues for the province and don't see enough financial return.

Heavy industry, she said, is great for creating jobs and wealth, but it also convinces many people to live outside the city's borders because people want to escape grit, noise and pollution.

"We have 20,000 people commuting in every day from Rothesay and Quispamsis, including a lot of the top executives for these companies," she said. "Think about how that hurts our budget."

The Canadian Manufacturers and Exporters backs Saint John's push for the 100 per cent return of industrial property tax.

Its New Brunswick advisory board includes a who's who of local business leaders, including Patrick Oland, chief financial officer at Moosehead Breweries, J.D. Irving's vice president of government relations Chris MacDonald and Joel Richardson, vice president of public relations at Cooke Aquaculture, among others.

"We think it's fair and reasonable that cities like Saint John that have the heavy industry should not give those taxes to the province," said spokesman Ron Marcolin. "They should retain those tax revenues because it came from the development of industry within the city itself."

However, the second part of property tax reform the mayor's proposing is a tougher sell. Industry doesn't want to pay higher taxes and hurt profitability.

Reardon is pushing for the provincial government to allow municipalities to charge completely different tax rates to homeowners, businesses and heavy industry. As it stands, the three are interconnected, with industry paying 1.7 times higher than the residential rate, the maximum permitted by law.

"We want to provide relief to homeowners but if we lower their rates too much, industry pays way less as well," Reardon said. "Meanwhile, assessments keep going way up for homeowners, while assessments barely budge for big industry.

"The burden needs to be shifted from homeowners to industry."

Past provincial governments, both Tory and Liberal, have refused to entertain such a de-coupling of rates for fear it would create job losses.

Reardon said the last thing she wants to do is drive local industry out of business.

"We can keep our tax rates competitive by looking at what industry pays elsewhere across the country," the mayor said.

But Marcolin warned that raising industry's taxes would hurt profitability and job creation.

"It's all about competitiveness. If we have even more pressure, with our costs going up through property taxes, then it makes us less competitive.

"We totally disagree with the de-coupling of residential and industrial rates."

John Chilibeck is a Local Journalism Initiative Reporter with The Daily Gleaner in Fredericton, New Brunswick. Title Image: Irving Pulp & Paper Limited, Reversing Falls, Saint John, New Brunswick (iStock 1174905233).