New Brunswick

Saint John hamstrung by provincial tax rules, report says

Report by Ontario academics Harry Kitchen and Enid Slack suggest user fees and provincial reforms to address Saint John tax woes.

Report to Saint John council claims there is little wiggle room for property tax changes

The Co-Op Oil refinery in Regina was assessed for taxes to be worth nearly three times more than the Irving Oil refinery this year despite being less than half the size.

A report commissioned by Saint John council shows the city's industrial properties may enjoy much lower property tax assessments than similar properties in other Canadian cities, but there's not much the municipal government can do about it.

"There is not much that Saint John can do on its own to improve the fairness and equity of the property tax because property tax policy is governed by provincial legislation," concludes the report which was jointly written by Ontario academics Harry Kitchen and Enid Slack.

The two were hired last winter to look at the overall "fairness" of property taxes in Saint John but found little wiggle room for city hall to shift the property tax burden around even if it wanted to.

Enid Slack is the director of the institute on municipal finance and governance at the Munk School of Global Affairs at the University of Toronto. She also wrote the report commission by Saint John Common Council. (Munk School of Global Affairs)

For the last two years a number of Saint John city councillors including Gerry Lowe, Shirley McAlary and Donna Reardon, have been questioning why the city brings in less tax revenue from its large industries than other Canadian cities seem to.

Other provinces 

This year the oil refinery in Regina, Sask., paid more property taxes than the Irving Oil refinery in Saint John, even though it's less than half the size.

The report says New Brunswick, like Ontario, exempts most "machinery and equipment"  from property tax, while other provinces like Newfoundland and Labrador, Quebec, Saskatchewan, Alberta and British Columbia do not.  

And because an oil refinery is mostly machinery and equipment, the exemption has a major effect on tax revenue.

In Regina its oil refinery was assessed for taxes this year to be worth $290.3 million, while in Saint John the Irving refinery, which is more than 100 per cent larger, was assessed to be worth $98.6 million.

Cities in New Brunswick are not allowed to set special property tax rates for heavy industry, compared to several other Canadian cities. (CBC)

Although many Canadian cities can get around a low assessment by setting a higher tax rate for an industry like oil refining, New Brunswick does not allow municipalities that flexibility.   

New Brunswick cites are only permitted to set a residential tax rate. Then by provincial law, commercial and industrial rates are automatically set 50 per cent higher.

According to the report, Canadian cities with big industries including Sarnia and Sudbury, Ont., Prince George, B.C. and Strathcona County, Alta., charge tax rates between 98 and 502 per cent higher on some properties than others — an option not available in New Brunswick.

The only solution

The only way for a city like Saint John to raise taxes on an industry it feels is under-assessed, is to raise them on every property owner at the same time.

Kitchen and Slack say much higher growth rates in the low tax bedroom communities around Saint John in recent years, suggest the city cannot raise its base residential property tax rate any further without losing more people to suburbs.

With no room to raise taxes generally on all property owners and no direct way to raise taxes just on one or two industries, Kitchen and Slack say the city should look to raise revenue through user fees like garbage collection and push the province for changes in property tax laws.

The report is scheduled to be presented to council on Monday evening.

About the Author

Robert Jones

Reporter

Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.

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