New Brunswick

New Brunswick tax deals, credits cost $1.5B in revenue, province reveals in surprise disclosure

In an unprecedented release of financial information Wednesday, the New Brunswick government posted an accounting of the cost of 53 provincial "tax expenditures" — some decades old — that cost the province an estimated $1.5 billion a year in forgone revenue.

Released financial records reveal information once said to be confidential

The New Brunswick government released financial information on tax exemptions and credits that cost the province $1.5 billion in tax revenue a year. (Maria Jose Burgos/CBC)

In an unprecedented release of financial information Wednesday, the New Brunswick government posted an accounting of the cost of 53 provincial "tax expenditures" — some decades old — that cost the province an estimated $1.5 billion a year in forgone revenue.

From property-tax exemptions on churches and hockey rinks to income and sales tax exemptions for individuals and businesses, to tax breaks for donating to political parties, the list includes information on several dozen tax deals, including some the government has previously refused to disclose.

"I am pleased to release today's document which continues our efforts to respect best practices in fostering government budgetary and fiscal transparency," Finance Minister Ernie Steeves said in a statement released with the financial report.

Tax expenditures cover broad areas of the economy and offer preferential tax rates or rebates to groups, individuals, businesses or municipalities. 

The amounts generally do not show up in government financial statements even though they can be worth millions of dollars, and there have been calls for years for the province to disclose more information about them.

The largest tax expenditure

The largest tax expenditure in New Brunswick is the basic personal amount each taxpayer is granted on the annual income tax form.   

Last year, the first $10,043 of earned income for individuals was exempt from income tax in New Brunswick, saving about 500,000 New Brunswick tax filers a combined $477 million.

A provincial property tax exemption on crude oil storage tanks and pipelines connected to Irving Oil's Saint John refinery cost the province $663,602 in forgone tax revenue in 2018. (CBC)

The report details that significant expenditure but also documents several smaller and more obscure benefits that, in some cases, have been treated as confidential until now. 

For example, the report reveals the cost to the province of a 38-year-old property tax exemption to Irving Oil Ltd. on crude oil storage tanks and pipelines connected to its refinery in Saint John was $663,602 in 2018.  

In 2016, the province claimed that figure was secret and refused to provide it to CBC News for a report about the storage tanks and the value of their tax exemptions.

"This information is considered confidential and should be obtained directly from the property owner," Service New Brunswick spokesperson Nichole Bowman said at the time. 

Steeves said people have the right to see that kind of information.

"It's letting people know what's going on with their money and what's going on with the province."

Exemptions for churches, arenas

In some cases, tax expenditures are more valuable than detailed in the report, which only accounts for revenue the province has forgone, not related costs to other levels of government.

In the case of churches, which are fully exempt from paying provincial and municipal taxes on more than $1 billion worth of their properties, the report said the benefit amounts to $18.2 million in uncollected taxes per year.

Saint John's largest church, the Cathedral of the Immaculate Conception, saves more than $80,000 a year in provincial property taxes and in excess of $100,000 in municipal property taxes, thanks to a blanket exemption granted to all New Brunswick church properties. (CBC)

Amounts municipalities lose from the tax exemption on churches is not detailed.

A similar property tax exemption on $400 million worth of New Brunswick hockey rinks, from the Tom Donovan Arena in Renous to the Avenir Centre in Moncton, costs the province $5 million a year, according to the report.

Tax expenditures involve so many undisclosed financial benefits there have been calls for more transparency in how they are reported to the public for years.

In 2003, then-auditor general Daryl Wilson complained that tax breaks, rebates and deals offered by the province were a black hole in public financial reporting.

Moncton's new Avenir Centre is assessed by the province at $67.9 million but pays no provincial or municipal property tax. An exemption granted to hockey rinks in New Brunswick in 1998 is universal. The tax break saves the Avenir Centre about $700,000 a year in provincial property tax. (Philip Drost/CBC News )

"There is currently no information available publicly on the cost of the tax expenditure programs offered by the province," Wilson wrote in his annual report.   

"There is no means of knowing whether these programs are achieving what they set out to accomplish. It is possible that a program could have achieved its purpose and is no longer a useful program for taxpayers."  

Steeves said if members of the public do not like what they see in some of the tax expenditures government is open to hearing about it.

"That isn't the reason I went ahead with it but by all means the public are always willing to submit their suggestions," he said. "Love to hear them."

Although comprehensive, the report does not include information on all preferential tax deals.   

For example, the value of the tax treatment of commercial timberland is not detailed. The assessed value of timberland in New Brunswick for taxes has been frozen at $100 a hectare since 1994, and the holdings are taxed as residential property, not at the higher rates of commercial property. 

In a statement, the Department of Finance said the special treatment of timberland is an assessment issue, not a tax issue, and so was not included in the report.

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