Tax drop 'good news' for wood firms: Bell

The export tax B.C. forest companies pay to ship softwood lumber to the U.S. is being cut by one-third because of rising wood prices.

The B.C. government says beginning May 1, the tax will fall to 10 per cent from 15 per cent under a complicated formula set out under the softwood lumber agreement with the U.S.

The formula calculates the tax based on the average price of lumber, and when lumber prices go up, the tax goes down. The four-week average lumber price is now $325 US per thousand board feet.

"The reduction in the export tax is good news for B.C.'s lumber companies and employees that work for them," Forests Minister Pat Bell said in a statement.

Bell said the province is seeing the highest average lumber prices since the agreement was signed with the U.S. in October 2006, ending a long-running and escalating dispute.

"It is a positive indicator that B.C.'s forest sector may be starting on the road to recovery," Bell said.

The softwood lumber deal limited Canadian exports of lumber to the United States and ended a trade dispute that centred on U.S. industry accusations that Canada illegally subsidizes its forestry sector.

Bell noted that the largest market for B.C. lumber is still south of the border, but said he's encouraged by the increase in shipments to other countries.

B.C. Forest Council president John Allan said the drop in the tax may result in a spike in exports for a while, but Canadian companies also face the challenge of a rising dollar.