September 26, 2023
Daytime aerial view of heavy industry on Tokyo Bay in the Kanto region

New Brunswick Set to Boost Tax Flexibility with Proposed Heavy Industrial Classification Legislation

In an innovative move toward more nuanced taxation, New Brunswick is proposing legislation that would introduce a new category for heavy industrial properties for tax purposes. By isolating this category from the wider definition of non-residential properties, the government could tailor a tax rate specifically for large industrial sites.

Finance Minister Ernie Steeves introduced An Act Respecting Heavy Industrial Property to the legislature on Tuesday. The legislation defines heavy industrial property as encompassing pulp and paper mills, select sawmills, mines, oil refineries, and other significant facilities.

Once passed, this bill would allow local governments to tax large industrial sites at a rate between 1.4 to 1.7 times that of the residential rate. Currently, all businesses fall under the non-residential tax rate, which is 1.5 times the residential rate.

New Brunswick Premier Blaine Higgs explained the rationale behind these changes. He pointed out that municipalities have often found themselves in a bind, forced to impose the same tax rate on businesses regardless of their size. “We want smaller businesses to benefit from a tax break, which will encourage them to invest more in their communities and continue growing,” Higgs commented.

This separate classification for heavy industrial properties has been a longstanding request by officials in the city of Saint John seeking comprehensive tax reform.

Saint John Mayor Donna Reardon expressed optimism about the bill, noting it was a step forward. She highlighted that while the proposed tax rates offer some autonomy, the province still maintains significant control.

However, for these proposed changes to have a substantial impact, a new process for property assessments is necessary.

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Saint John officials, including city councillor Gerry Lowe, stressed that fair assessments for the region are crucial. Both Reardon and Lowe agreed that future steps must involve revisions to establish an equitable tax assessment system for the changes to be effective.

The proposed amendments to heavy industrial properties are slated to take effect in the 2023 taxation year.