The province of British Columbia informed it is amending the Depreciation of Industrial Improvements Regulation under the Assessment Act to allow a fixed depreciation rate regime specific to large LNG facility improvements that will help smooth provincial property tax revenues where development occurs.
Under the Assessment Act and its regulations, new LNG plants would be classified as Class 4, major industry. LNG capital investments are projected to far surpass other Class 4 investments in the province. To provide greater stability and predictability to the resulting provincial tax revenues from LNG facilities – including school, hospital, police, and regional district taxes – changes to the Regulation allow for:
The province said in a statement that these changes will shift some of tax burden from early years to later years, as well as ensuring a competitive, balanced and equitable framework for the industry. This approach also means that taxes for other taxpayers in the area will not increase rapidly over time as a result of the depreciating assessment of the LNG facility. Municipal property tax revenues will not be affected by these amendments.
For the Pacific NorthWest LNG project, taxes paid to the District of Port Edward are being dealt with under a separate agreement-in-principle signed last December between the district and the proponent. Under the agreement, Pacific NorthWest LNG will provide negotiated municipal property tax payments to the district over the next 25 years (unrelated to assessed value), as well as infrastructure investments (e.g. support for water and sewer system upgrades and future construction of the Wampler Way bypass).
Pacific NorthWest LNG will also pay the District of Port Edward upfront monthly sums in 2015, allowing the district to begin preliminary work in the community. The first full taxation year will be 2016, with escalating annual payments for 25 years.
Image: gov.bc.ca