Squamish officials want their voices heard on taxation before the province establishes rates for liquefied natural gas (LNG) processing and export facilities.
On Tuesday (Feb. 25), Coun. Ron Sander said that while the province seems to be moving toward a tax-rate cap for the industry, officials should look at system that takes into account the relatively small size of the proposed LNG facility at the site of the old Woodfibre pulp mill. Woodfibre Natural Gas, which is proposing to export up to 2.1 million cubic metres of LNG per year, is approximately one-tenth of the size of plants proposed in Kitimat and Prince Rupert. As such, a tax rate that fits in with those projects may not work for Squamish, Sander said.
“We are faced with a unique circumstance,” he said.
If poured into the same pool, Sander said he fears the plant could generate significantly less municipal tax revennue than did the pulp mill. Before the mill closed in 2006, owners Western Forest Products paid approximately $2 million a year in municipal property tax.
B.C. Assessment officials haven't been able to hand the district concrete figures on LNG plant assessments, district chief financial officer Joanne Greenlees said. However, they have indicated there won't be a different taxation system for portions of the plant on the land or on the water, she noted. Byng Giraud, Woodfibre Natural Gas vice president of corporate affairs, on Tuesday said that if the project goes ahead, the company expects to pay its fair share of taxes, both on the municipal the provincial side of the equation.
“We want to make sure that it's right — and not just right for us, but right for the municipality,” Giraud said. “We want to make sure we're strong contributors to the municipality and that nobody feels that they've somehow been disadvantaged.”
He added, “We've already entered into very early discussions with the DOS. Once we've figured out what the assessment is, then we have to work out the rate.”
The B.C. government last week announced a “framework” for how liquefied natural gas (LNG) exporters in the province are to be taxed. Finance Minister Mike de Jong's budget would tax them based on their net income, with 1.5 per cent charged on profits accrued before the firms' capital investment is paid off and up to seven per cent afterward.
Giraud said he assumes the “up to” part of the equation means there's room for negotiation between government and industry. De Jong said the rates could change after consultation with the companies. None of the companies proposing to build new LNG export facilities in B.C. have decided whether to proceed, even if all approvals are obtained. The taxation scheme is just one of the many factors they'll have to weigh before committing, Giraud said.
“I think we have a slight advantage in that because we're a more modest facility,” he said. “Even given the rough calculations based on that [proposed] model, we're not intimidated by the numbers. We don't think that's going to be a big factor in our decision. In our minds, there are other factors such as the question about [using electricity to power the facility] that will play a larger role in our decision.
“We'll be paying close attention to the negotiations and we're interested, but it's a smaller factor to us.”
Giraud said he hadn't heard whether the province was considering allowing companies to be taxed at different rates for onshore and offshore facilities.
“I've heard different stories about something being offshore or onshore being assessed at a different value, and the answer is that I just don't know,” he said. “What I can say is that whatever that winds up being, it's not going to affect our decision.”
While natural gas producers pay royalties on the gas that comes out of the ground, exporters do not, Giraud said. However, in addition to provincial and municipal taxes, companies such as Woodfibre Natural Gas expect that they'll also be part of the B.C. carbon taxation scheme, whatever that may entail, he said.
The company hopes to begin exporting LNG by sometime in 2017. Barring any major surprises on the environmental assessment or financial side of the equation, company officials hope to announce whether they plan to proceed with the project by the end of 2014, Giraud said.
— With files from David Burke, The Chief