Domtar pays the most tax in Kamloops at $4.9 million. However, the city is working to reduce the rate (Image Credit: CFJC Today)

By Chad Klassen

HEAVY INDUSTRY TAX RATE

Domtar confident in city’s approach to reduce heavy industry tax rate

Jan 15, 2020 | 5:00 PM

KAMLOOPS — Domtar, an employer of 330 workers at its Kamloops mill, says it’s happy with how the City of Kamloops is working to reduce the heavy industry tax rate.

The pulp mill still pays the most tax in the city at $4.9 million annually. But for the last three years, there has been a policy in place that caps the amount of tax companies in Class 4 pay, including Domtar and Tolko.

The city is also working to reduce the mill rate ($71.81), which is well above the average of B.C. cities ($42.60). Domtar has already seen cost savings. In 2016, when the policy launched, it paid $5.1 million in taxes. Last year, the tax bill dropped to $4.9 million.

“What that allows us to do is to say to our company and to our leadership that the City is willing to work with us on this issue, that the City recognizes that it’s a competitive challenge, a competitive barrier, and that they are taking steps to address it,” said Domtar’s regional public affairs manager Bonny Skene.

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The mill rate for Domtar and Tolko is significantly higher than the rest of the province (Image Credit: CFJC Today)

At council on Tuesday (Jan. 14), it was decided the tax rate policy will end once it comes in line with the provincial average.

“The policy has been in effect for three years now, so what that policy is doing is it has capped the top level of what [Domtar] will pay in taxes this year,” said the city’s director of corporate services Kathy Humphrey. “For Domtar, this adds consistency, know that the policy will continue over the next few years until gradually that rate drops.”

Domtar and Tolko split the Class 4 heavy industry tax burden (Image Credit: CFJC Today)

Domtar’s assessed value — both in terms of property and equipment — came in at $68.5 million. It results in the $4.9 million tax bill. Tolko, on the other hand, the only other company under the Class 4 rates, pays $450,000 a year.

However, as Kamloops’ rates slowly move closer to the average, it will lead to even more cost savings.

“As we look to make the Kamloops pulp mill competitive, it then gives us the ability to attract capital for projects that in turn improves the ability and the operation and the performance, and also gives back to the community.”

The city says with the Trans Mountain pipeline coming into operation, it will reduce the burden on Domtar and Tolko.

“We’re expecting that it’ll be $1 million worth of tax coming into value,” said Humphrey. “So that million dollars will be added to the growth, which definitely would drop the rate.”