September 24, 2023

New Brunswick Empowers Municipalities with Heavy Industry-Specific Property Tax Legislation

The New Brunswick government has put forth a legislative reform that will grant municipalities the ability to define property tax rates for heavy industries starting from next year, albeit within set boundaries. This significant change could impact numerous communities hosting industrial plants across the province, a move championed by the City of Saint John.

Finance Minister Ernie Steeves presented the bill, named “An Act Respecting Heavy Industrial Property,” at the legislature on Tuesday. This act seeks to create a “new heavy industrial property classification” for municipalities to employ when deciding on specific tax rates.

As per the proposed legislation, municipalities could increase property tax rates for heavy industries up to 13.5% above current levels without mandating an equivalent adjustment for other community property owners. In contrast, the existing rules require such a synchronized adjustment. The bill also provides municipalities the freedom to decrease industry rates by as much as 6.7% under similar circumstances.

The legislation will apply to a wide array of industries, including oil refineries, large sawmills, power plants, pulp and paper mills, mines, and major manufacturing operations, among others. However, wind and solar farms are explicitly exempted, with no indication given regarding food processing plants.

Steeves described the move as a means to provide “increased financial flexibility to local governments and rural districts.”

Saint John Mayor Donna Reardon praised the change as a victory for greater local autonomy and flexibility concerning taxation. Based on past estimates, the city could stand to gain an additional $1.5 million in revenue under the proposed changes.

The reform will allow New Brunswick municipalities to establish three separate tax rates starting next year, one each for residential properties, business properties, and heavy industrial properties. For the first time, these rates can diverge from one another and will no longer need to be set at 150% of residential rates. However, they must still fall within a bracket of 140 to 170% of a community’s residential rate.

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Manufacturers’ response to the news has been relatively muted so far, with major industry player J.D. Irving Ltd. yet to comment. The government will be notifying the owners of all potentially affected properties via a formal letter, according to a recent press release.