A tax cap for LNG industries could make life harder in Kitimat

Local politicians weigh in on the government's possibility of capping property taxes for LNG industries.

The provincial government will contemplate  giving a limit to municipalities on how much they can tax liquefied natural gas projects.

It’s a move that may make projects more competitive but has local politicians speaking out.

The idea was floated by Minister of Natural Gas Development Rich Coleman in an interview with the Globe and Mail.

The Sentinel has contacted his office for comment but have not yet heard back.

There were few details on how such a tax cap would work, including whether it’s for the entirety of the Class 4 (heavy industry) tax category or just for LNG projects themselves.

But the District of Kitimat Treasurer Steve Christiansen explained that a tax cap would, in time, shift municipal expenses on to residents.

“It is fair to say that a cap on Class 4 taxes would, in Kitimat and other communities with Class 4 holders, likely result in a large shift of property tax burden to other tax classes, most to Class 1 — residential — and Class 6 — business,” he said through e-mail.

He added, “There would also be a concurrent reduction in municipal non-core services, most likely in recreation, culture, beautification, snow-clearing, and a general lowering of maintenance.”

However, such a reduction would not be immediate. He said that Class 4 properties begin with a high assessment, so the tax rate for them is kept lower, and raised over time to maintain the same level of taxation as they depreciate in value.

“Once the tax rates climb high enough to hit an arbitrary provincial cap, then the tax shift to the residential and business classes begins. Because we have a new asset with the rebuilt smelter, it may be some years before we reach this situation, depending on how low the cap is,” he said.

Of course the impact province-wide won’t be equal. Christiansen notes that some towns won’t have the heavy industry that they already rely on, while others will see drastic shifts, such as those with full depreciated pulp mills as an example.

Mayor Joanne Monaghan remembers past fights to stop taxation caps for industry and is not left pleased with talks of bringing it back again.

She points to the swimming pool, ice rinks, and the library, among the services the town offers to make this an attractive community for workers.

She sees tax caps as the province’s way to take more money out of the community.

“For our bridge, for instance, we’ve actually had to turn some of the equipment away for the modernization on the trucks because they were too heavy for the bridge,” she said. “Does that make sense to you? And now they want to take some money away from us. Am I happy? No.”

Skeena MLA Robin Austin, also the opposition critic for natural gas development, feels an LNG tax cap would be a bad idea as well.

“I think it’s completely wrong that the provincial government is going outside of its jurisdiction and starting to step on the toes of what municipal government has by constitution and always had the right to do,” he said. “This is the one way in which small town communities are able to retain some of that benefit themselves.”

He said the BC Liberals contemplating such a plan shows “how much trouble they’re in on this file.”

“They’re trying to ride roughshod over municipal government and start dictating from Victoria how they should set their tax rate. And it’s fundamentally wrong.