The Province is helping build the rural economy and grow jobs throughout British Columbia by ensuring that sectors like forestry, mining, LNG, and oil and gas won’t have to pay PST on electricity purchases.
The Province is eliminating provincial sales tax on electricity over the coming two years – supporting jobs and competitiveness by saving small, medium, large and industrial businesses across the province $164 million by 2019-20. This measure was recommended by the Commission on Tax Competitiveness.
“British Columbia was the only jurisdiction in North America with a retail sales tax on electricity purchased by industry and businesses, and that put them at a disadvantage with competing jurisdictions,” said Minister of Energy and Mines Bill Bennett. “This is one important step for B.C. in attracting investment and jobs.”
Mayors representing rural communities with resource-based economies had asked the Province to remove the PST on electricity purchases to maximize the competitiveness of their local resource industries to help protect thousands of existing jobs, and to help create even more jobs.
“Every community in B.C. benefits when our rural communities are strong,” said Donna Barnett, MLA for Cariboo-Chilcotin and Minister of State for Rural Economic Development. “Rural communities rely on resource industries and small businesses to provide their local economies with high-paying jobs and tax revenues to create a healthy place to raise a family.”
Once fully exempt, large businesses, including industrial users, will save about $100 million annually while small- and medium-sized businesses will save about $50 million.
Municipal governments will also see modest tax savings. Schools and hospitals will save $11 million, which is funding they will be able to invest in health and education programs.
In the pulp and paper industry, the PST on electricity represents 1.8% of total costs. The PST on electricity can often be the difference between profit and loss for these companies.
“I would give this budget an ‘A’,” said David Formosa, mayor of Powell River, which is home to a Catalyst pulp and paper mill. “A group of rural mayors asked the provincial government to exempt the resource industry from the PST on electricity – that happened, and it’s great news.”
The PST exemption will encourage LNG proponents to choose electricity to power their facilities, and will also help thousands of other businesses, and the jobs created by the provision of goods and services such as trucking, equipment operations and mechanical services to resource companies.
The Woodfibre LNG Project, a 2.1-million-tonnes per-year liquefied natural gas project in the District of Squamish, will be powered by clean renewable electricity from BC Hydro. The project will provide approximately 650 jobs at the peak of construction and more than 100 jobs at the facility, and additional administration type jobs in Squamish and Vancouver during operation.
“The B.C. government, by offering a level playing field to industry and businesses (by removing the PST from electricity) is again increasing the global competitiveness of made-in-B.C. businesses, which benefits all of our communities,” said Byng Giraud, country manager and vice president of corporate affairs for Woodfibre LNG Limited.
The exemption of PST on electricity bills is one of the key ways the B.C. government is taking action to strengthen and grow rural communities. To further support the needs of rural communities and grow local economies, the Province will be releasing a Rural Economic Development Strategy in the near future.
“Our community was re-invigorated with the recent news that two coal mines, Brule and Wolverine, were re-opening thanks to Conuma Coal’s confidence in B.C. as a great jurisdiction for mining,” said Don McPherson, mayor of Tumbler Ridge. “However, the unpredictability of coal markets can lead to mines shutting down again. That’s why eliminating the PST on electricity is going to help make our coal mines more competitive and able to withstand fluctuations in coal prices.”
“Although we’re seeing positive signs as the commodities cycle improves, iron workers know first-hand recovery in the mining industry, and recovery for mining towns, is still fragile,” said Doug Parton, business manager of Ironworkers Local 97. “The PST relief will help the companies we work for, and the rural communities they economically support, continue to operate and pay our members family-supporting wages.”
“The mining industry in British Columbia needs to be as competitive as possible and the PST on electricity rates was an impediment to that goal,” said Brian Cochrane, business manager of the International Union of Operating Engineers Local 115. “This relief will assist in supporting good jobs in the mining sector and strengthening the communities that rely on these industries.”
The policy is also aligned with B.C. government actions under the Climate Leadership Plan to encourage electrification to reduce greenhouse gas emissions because this will encourage businesses to use clean, renewable BC Hydro electricity over other more carbon-intensive fuels. B.C.’s electricity supply is 98% clean, making electrification one of the best ways to reduce GHG emissions. The Ministry of Energy and Mines worked with the Ministry of Finance to make this change to tax policy.
The Province recently followed through on its commitment to support economic diversification in rural British Columbia by distributing over $750,000 in new project-development grants to help small communities strengthen local economies.