Mayors' Letter to Premier Christy Clark and Minister Mike De Jong
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January 16, 2017 Hon. Christy Clark Hon. Mike de Jong Premier Minister of Finance Government of British Columbia Government of British Columbia PO Box 9041, Stn Prov Govt, PO Box 9048, Stn Prov Govt Victoria, BC V8W 9E1 Victoria, BC V8W 9E2 By email: [email protected]; [email protected] Dear Premier Clark and Minister de Jong: Re: Exempting the industrial and business use of electricity from the PST to protect jobs in rural BC communities We write to you today on behalf of the eight municipalities we represent to request the provincial government to exempt the industrial and business use of electricity from the Provincial Sales Tax (PST) as recommended by the BC Commission on Tax Competitiveness (“Commission”). Our communities all share one thing in common: we rely on the forest industry to provide our local economies with high paying jobs and the tax revenues needed to create a healthy place to raise a family. For generations the forest industry has been the foundation of the BC economy, especially in rural communities. However, our local mills today face rising costs and increasingly stiff competition in the global market, not to mention the threat posed by the expiration of the Softwood Lumber Agreement. Unfortunately, recent curtailments and mill closures across the province have significantly impacted communities like ours, demonstrating that the competitive threat facing our local mills is real. As you know, BC’s forest industry is closely integrated. The integrated nature of the pulp and paper and solid wood sectors keeps both viable, while helping to maximize the full value of our forest resources. For example, sawmills on the coast and in the Interior sell chips and hog fuel to pulp and paper mills, providing them with much needed revenue. Yet, when one link in the ‘forestry value chain’ suffers, the entire industry suffers. It also hurts the thousands of other businesses and jobs in logging, trucking, equipment operations, mechanical services, and much more, that provide goods and services to the industry. In reviewing the Commission’s final report, we were surprised to learn that British Columbia is the only jurisdiction in North America that levies a retail sales tax on electricity purchased by industry and business. The 7 per cent PST adds a significant cost to these manufacturing facilities, particularly those that rely heavily on electricity in their manufacturing processes. The net effect of the PST is that energy intensive mills in BC face a 7 per cent cost disadvantage compared to mills in other competing jurisdictions. Our discussions with forest industry representatives have made it clear that the elimination of the PST on industrial electricity purchases would improve the competitiveness of the forest industry and support and protect jobs in our communities. The Commission’s objective to modernize BC’s PST and other business taxes to drive competitiveness and economic growth is laudable and complements your government’s commitment to improve the competitiveness of BC’s forest industry. Communities in rural British Columbia are not experiencing the same economic growth enjoyed in Lower Mainland communities. Protecting and growing jobs in rural communities is a priority that we can all agree is important for British Columbia and its future. As mayors of forest dependent communities, we stand together to voice our support for the elimination of the PST on purchased electricity for industrial and commercial purposes in the upcoming 2017 provincial budget. Eliminating the PST on electricity for businesses is meaningful action you can take that will not only help the forestry industry and the jobs it supports, but will also benefit the mining industry and other energy intensive job creators in our province. Over the past year you have consulted widely to create a plan for a competitive forest industry (“Strong Past, Bright Future: A Competitiveness Agenda for British Columbia’s Forest Sector”) and directed the Commission to identify opportunities to modernize BC’s tax system. With this important work complete, we believe eliminating the PST on electricity for industry and business is the right next step in your government’s ongoing efforts to promote economic growth. Thank you for your consideration of this matter which is of great importance to our local mills and the communities, employees and families that depend on them. If you would like to discuss this matter in further detail, we would be very pleased to meet with you. Please have your staff contact Mayor Dave Formosa’s office at 604 485-8601 to coordinate a meeting date and time. Regards, Mayor Dave Formosa, City of Powell River Mayor Jon Lefebure, Municipality of North Cowichan Mayor Bob Simpson, City of Quesnel Mayor Rob Fraser, District of Taylor Mayor Akbal Mund, City of Vernon Mayor Mike Ruttan, City of Port Alberni Mayor Pat Crook, District of Mackenzie Mayor Jan Allen, Village of Port Alice EC: Minister Steve Thomson Minister Shirley Bond Minister Bill Bennett Minister of State Donna Barnett .