BC HYDRO’S TAX OBLIGATION (2005)

 

In its first report to the Legislative Assembly, the Select Standing Committee on Crown Corporations recommended that: “Crown corporations include the financial implications of paying full property taxes as a factor in their budgeting forecasting.”

 

It is impractical to suggest that government should expect the same level of tax relief from the public service as is received from the private sector.  The same cannot be said for commercial Crowns, which provide services that are equally available from the private sector.  The Chamber endorses the recommendation of the Committee to level the playing field between commercial Crowns and investor owned utilities by factoring in appropriate levels of property tax.

 

This is particularly true for BC Hydro, which delivers a return on equity commensurate with private sector utilities, but avoids taxes to local governments.  BC Hydro’s school district payments and grants in lieu to local governments total some $140 million annually.  Its tax payment should be in the order of $250-$300 million.  This translates into a $120-$160 million tax loss for communities throughout BC.  Again, if the shareholder is going to receive a Return on Equity (ROE) commensurate with the private sector, then the Crown should be paying property tax to local government that is commensurate with the private sector.

 

THE CHAMBER RECOMMENDS

 

That the provincial government continues to level the playing field between commercial Crowns and investor-owned service providers by ensuring that commercial Crowns  delivering ROE commensurate with the private sector also pay property taxes commensurate with private sector levies.