Killed by Liberals in 2014, business property tax cuts resurrected by PCs

NB Power generating stations, the Irving Oil refinery, large malls and office buildings will be the big winners of non-residential property tax cuts proposed in Tuesday's provincial budget - as New Brunswick Progressive Conservatives take a second run at delivering relief to commercial and industrial property owners.

"We have heard from the business community that there is a need to address the high tax burden and cost pressures it faces," said New Brunswick Finance Minister Ernie Steeves in his budget speech Tuesday

"While there are a variety of measures that we could take, we have chosen to lower the provincial non-residential property tax rate."

Unlike apartment buildings, which are also getting property tax relief,  PCs did not specifically campaign on lowering property taxes for commercial and industrial businesses during the 2018 election.   

However, the plan unveiled by Steeves resurrects an identical  2012 attempt by the former PC government of David Alward to deliver property tax relief to business that was eventually undone by the former Liberal government of Brian Gallant

Big business, big savings

According to the department of finance there are 24,000 business properties in New Brunswick that will share $43 million in annual tax savings when reductions proposed in the budget  are fully implemented over the next four years.

That's a modest saving for most - about $1,800 per business property - but for owners of a few major operations, savings will be substantial.

The largest beneficiary will be NB Power which will save more than $1.8 million per year in property tax on its big generating plants.  New Brunswick's most valuable property, the Point Lepreau nuclear generating station, will see it's property tax bill cut by $893,000 alone.

In retail, New Brunswick's three largest shopping malls - Champlain Place in Dieppe, the Regent Mall in Fredericton and McAllister Place in Saint John - will save a combined $1 million per year.   Large box stores, like Costco, Home Depot, Walmart, Canadian Tire, Bass Pro Shops and others will save between $20,000 and $80,000 per outlet.

Among industrial companies, Irving Oil Ltd. will see about $336,000 per year in property tax reductions on its refinery and another $187,000 eliminated on its new Saint John headquarters.  JD Irving Ltd. will save at least $500,000 per year on a variety of its offices, mills and stores in various locations.

"We can't just (reduce) net debt," Steeves told reporters in the budget lockup about the tax reductions.

"Beyond balancing the budget, we have to give back and so those are the choices we made for taxes. We thought they were ones that would help business and ultimately help New Brunswickers and ultimately help the economy of New Brunswick."

Debate resurfaces

The former government of David Alward tried to reduce taxes on business properties an identical amount over an identical four year period, but Liberals opposed the measure, campaigned against it in the 2014 election and quickly reversed it when they formed government later that year.

Refloating the measure now is part of an ongoing debate in New Brunswick about whether property tax on business is too high or too low.

New Brunswick does have some of the highest property tax rates for business in Canada.  In Saint John, commercial and industrial properties are charged 4.88 per cent of their assessed value in both municipal and provincial property taxes.  

That's two thirds more than apartment buildings are charged and nearly triple what homeowners pay.

However, the assessed value of commercial and industrial properties upon which tax rates are applied in New Brunswick are often much lower than elsewhere. 

In Irving Oil's case the 4.88 per cent property tax rate on its refinery is the second highest in Canada.   But for its size, the assessed value of the refinery at $102.7 million is well below the national average.    

Consequently, the $5.0 million property tax bill Irving Oil pays on the refinery, as a percentage of the refinery's output, is less than the national average.

Last fall, a legislature committee held hearings into a motion by Saint John Liberal MLA Gerry Lowe calling for an end or reduction of property tax exemptions for industry that help keep their property tax bills low, despite high tax rates.

Industry lined up to oppose the idea.  At the time, Steeves called it "a business crusher" and said he opposed higher property taxes on business.