New Brunswick

Brian Gallant announces Canaport LNG tax deal will be repealed

Premier Brian Gallant announced on Tuesday in Saint John the provincial government will repeal a controversial property tax deal granted for the Canaport LNG terminal.

Legislation will be introduced to make repeal effective for 2017 tax year

Premier Brian Gallant and Saint John Mayor Don Darling made the announcement at Saint John City Hall. (Rachel Cave/CBC)

The 2005 tax deal that gave Canaport LNG property owner Irving Oil Ltd. a 90 per cent discount on its property tax bill until 2030 will be repealed effective next year.

"We're cancelling a tax break that was given to the Canaport LNG terminal," said Premier Brian Gallant Tuesday at a news conference in Saint John. 

"It's as simple as that."

Gallant says the new legislation will be introduced in November and is being drafted at the request of Saint John city council and with the consent of other municipalities that could be impacted.

Irving Oil currently pays $500,000 on the Canaport parcel, although the property's assessed value is $299.4 million.

Without the discount, the company would be expected to pay more than $8 million per year in property taxes.

Saint John Mayor Don Darling says it's too soon to tell how much money Saint John will gain by the repeal of tax break for Irving Oil Ltd. on the Canaport LNG terminal. (CBC)
Once the repeal is activated, the new revenue will be held in trust accounts until the dust has settled on the question of whether Irving will appeal its tax assessment and the outcome of such an appeal.

"When the property valuation is finalized, any balance in the account, with applicable interest, will be paid to Saint John and other entitled local governments," said Gallant.

Saint John Mayor Don Darling says it's too soon to say what the city's net gain could be.

"If there's any new increase in taxes collected, and there's no guarantee that this will happen, it will go directly to support community priorities such as roads, recreation and safety services for the residents of Saint John," said Darling.

Equalization impact

The province has a formula that shifts some funding from municipalities with strong tax bases toward those with weaker tax bases.

In 2016, Saint John's equalization payment through the formula was $17.5 million.

It's possible that some of that money could be clawed back and redistributed to other towns and villages.

Miramichi, for example, which currently receives $5.4 million in equalization, could expect more.

Other beneficiaries would likely include Edmundston, currently receiving $3.5 million in equalization, Bathurst at $2 million, and Moncton at $2.3 million.

Prior to the premier's announcement today, the province said it was looking to other municipalities to agree to the trust fund concept until everything is sorted out.

The province didn't want to be on the hook for funds owed back to Irving in the event that the company's tax assessment is altered to Irving's advantage.

Gallant prefaced today's announcement by saying it was the Bernard Lord Conservative government that approved the tax break in 2005 and that the Liberals of the day opposed it.