Saint John council signals need for tax help from industry

Saint John city council's move last week to wring more property tax dollars out of Irving Oil Ltd. is only the latest signal from that body it wants more help from industry to pay the city's bills.

"We just don't collect enough property tax in this city to do what we want to do," said Coun. Shirley McAlary last Monday in proposing the city strip Irving Oil of a lucrative tax concession on land it leases to the Canaport LNG development."

We just don't collect enough property tax in this city to do what we want to do.- Coun. Shirley McAlary.

"There's nothing personal against any corporation. I appreciate everything everybody does but I also think we have to do what is right for everyone."

But the LNG tax deal is only part of a larger issue that has been increasingly surfacing at city council meetings over whether industry is paying enough to finance public services in Saint John.

Tax pressure on homeowners rises

Currently, Saint John homeowners pay about 61 per cent of city taxes, up from 55 per cent in 2000 and city politicians don't seem inclined to let it climb any higher.

Last year, Coun. Donna Reardon said she didn't like the extra burden placed on the city's fire department by crude oil trains rolling through the city with little extra money to deal with it.

"It just doesn't seem fair to download those costs onto the citizens through a tax rate while you have big business riding into your town, you know, with dangerous goods," said Reardon.

Saint John's oil-by-rail terminal is Canada's largest and was built in 2012 by Irving Oil to take advantage of cheap western North American crude that can only reach the city by train.

Rail terminal taxes

The terminal has been an important contributor to the company's bottom line, at times supplying half of the oil processed by its Saint John refinery, but it has not had a similar impact on Saint John's own finances.

Despite causing traffic problems, safety concerns and training and equipment problems for firefighters, the rail terminal pays the city just $19,300 in annual property tax, about half the $37,000 in taxes a Tim Hortons built across the street around the same time pays the city.

Saint John Coun. Gerry Lowe, who with McAlary has become the main proponent for ending Irving Oil's tax break on the LNG property, has also pushed for more money to deal with the crude oil train issue as well as more tax revenue from industry generally.

He says he's become convinced the city is too timid in its dealings with industry and is fond of pointing to Alberta as proof.

"You go out west to places where they have industry such as we have here and they're rolling in money," said Lowe.

Strathcona collects more taxes

In western Canada, the central oil refining community is Strathcona County, Alta., just outside of Edmonton. It's a slightly larger municipality than Saint John, with about 95,000 people and has two oil refineries that combined are about the same size as Irving Oil's — one owned by Suncor and one owned by Imperial Oil.

Last year, the two paid $26.5 million in property taxes according to the community's assessment and tax department and although some of that money goes to the province of Alberta to fund education, $16.4 million went directly to Strathcona County to finance normal municipal services.

That's more than six times the $2.6 million in property tax paid to Saint John by the Irving Oil refinery this year, even though Strathcona County claims to be a business friendly community that is particularly devoted to its petroleum companies.

"Through our policies, civic alliances and private partnerships, we support a positive business climate in which to advance petrochemical development in our community," it said in this year's budget document.

Irving Oil has argued that low taxes for it are ultimately good for the city because it makes investing in job creating developments, like the LNG terminal and the recent $200-million upgrade at the refinery, affordable. The refinery itself, the company says, employs 1,400 local people.

"The returns from our existing projects make all of these investments here at home possible," the company said last June in an open letter to the city discouraging changes to its LNG tax deal.

That's been an effective argument in the past, but Saint John's current council has been signalling for months it is not as inclined as it used to be to listen. Last Monday, it proved it.