Tax relief

B.C. is the only place in North America that charges sales tax on electricity of businesses

B.C. is the only place in North America that charges sales tax on electricity of businesses, a cost the finance ministry is considering removing to help the struggling forest and mining industries.

B.C. already has higher taxes for businesses relative to the rest of Canada, and collects $160 million from provincial sales tax (PST) on electricity bills.

Mayors of eight forest-dependent communities wrote to Finance Minister Mike de Jong and Premier Christy Clark in mid-January, asking for PST relief for lumber, pulp and paper producers in their communities.

“Communities in rural B.C. are not experiencing the same economic growth enjoyed in Lower Mainland communities,” wrote the mayors of North Cowichan, Quesnel, Vernon, Port Alberni, Mackenzie, Powell River, Taylor and Port Alice. “Eliminating the PST on electricity for businesses is meaningful action you can take that would 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.”

The finance ministry issued a statement Jan. 24 saying de Jong is “considering this proposal along with many other spending priorities.”

Cabinet would make the decision, only to be revealed when de Jong tables the provincial budget Feb. 21.

Energy Minister Bill Bennett said the issue has come up over the years, but the Commission on Tax Competitiveness report has created a “unified focus” among groups including the B.C. Business Council, the B.C. Chamber of Commerce, the Vancouver Board of Trade as well as mining and forestry associations.

“Taking PST off the purchase of electricity would help pulp mills, would help the sawmills, would help the mines,” Bennett said. “It would help small business, and B.C. is one of the only, if not the only jurisdiction that charges sales tax on purchase of electricity.”

The commission found that B.C.’s PST impedes investment in machinery and equipment, which is the third lowest province in Canada.

– Tom Fletcher