Small and medium-sized manufacturers in the Lower Mainland say they're being singled out by a tax change that applies only to them and not to heavy industry.
"We feel discriminated against," said Betty Lou Pacey, the owner of BL Innovative Lighting, a manufacturer of fibre optic lighting. "Secondary manufacturing is critical to the development of this province."
The school property tax credit was introduced in 2009 and renewed in 2011 as a temporary way to boost the economy during the recession. The measure reduced school taxes by 60% for both light and heavy industry.
According to the 2013 budget, however, the B.C. government will phase out the credit over two years. This year, manufacturers classed as light industry will have to pay half the normal school tax rate. In 2014, they'll pay the entire amount.
But heavy industry, like smelters, pulp mills and mines, will still be able to take advantage of the credit.
Pacey anticipated the change would cost her business, which employs 15 people, between $8,000 and $10,000 annually.
"For a small manufacturer, that's substantial, because we have an economy that's not vibrant," she said.
Justin Williams, owner of metal fabricator Williams & White, estimated his business would pay an extra $10,000 per year because of the change. The company employs 50 people.
Pacey and Williams both said that while their businesses are doing well, they know of other manufacturers who are still struggling with the sluggish economy.
"This is going to have a huge effect even on us," said Williams. "I can only imagine if our business was in a different position financially than we are."
Manufacturers understand that the B.C. government is trying to balance its books after facing a revenue shortfall in 2012, said Marcus Ewert-Johns, director of government affairs for Canadian Manufacturers and Exporters BC (CME BC). But he added that it's unfair the change applies only to light industry.
"People will always talk about mining, forestry, film, tourism. But the manufacturing sector represents a fair portion of the economy," said Ewert-Johns.
"Thirty per cent of business tax revenue that comes to the government comes from the manufacturing sector."
The change is part of the Ministry of Finance's policy to treat light industry the same as non-industrial businesses when it comes to property tax, said Jamie Edwardson, a ministry spokesman. He said the two categories have historically operated under the same property tax rules.
But he could not explain why heavy industry would get to keep the credit.
Pacey and Williams were also dismayed by the lack of consultation. According to CME BC, businesses became aware of the change only when they started receiving their 2013 tax statements.
"Yes, it was in the budget, but it was just a little two-liner," Pacey protested.
Williams wants the credit extended until the economy truly recovers or to have the money put back into innovative manufacturing through more research and development funding. •
