July 17, 2008

British Columbia’s ready-mix producers see threat in new carbon tax

RICHARD GILBERT

staff writer

The new carbon tax in B.C. may be revenue-neutral for taxpayers, but representatives of the concrete and cement industries say the tax threatens domestic producers.

The tax came into effect on July 1 and will generate an estimated $1.85 billion over three years, but it is considered to be revenue-neutral because all the taxes collected by the government will be returned to businesses and individuals.

Despite some positive feedback to the government’s environmental approach to financial planning, not everyone is happy with the new measures for reducing carbon emissions and greenhouse gasses.

The B.C. Ready-Mixed Concrete Association (BCRMCA) has written a letter to new Finance Minister Colin Hansen to express their concerns about the impacts of the carbon tax on their industry.

“We support climate change initiatives. However, we are concerned about the unintended negative consequences of the carbon tax on our industry,” said Carolyn Campbell, executive director of the B.C. Ready-Mixed Concrete Association (BCRMCA).

“The increased costs of producing concrete has the potential to make it less competitive with other building materials and increase price/cost volatility in the B.C. construction market.”

According to her, the tax has led to overall increases in energy costs, which are already a significant portion of a ready-mix facility’s operational costs for trucking and make up more than 40 per cent of the operational cost for cement.

“It will make B.C.’s three cement facilities vulnerable to plant closures, exposing more than 100 B.C. ready-mixed concrete plants to uncertainty of supply for the critical component of their product,” she said.

Campbell believes this could lead to even more problems.

“If the cost to produce cement gets prohibitive and cement plants in B.C. are shut down, we will have to go to Asian markets to import it,” she said. “This will not reduce emissions. It will just shift emissions overseas to countries with less stringent emission regulations.”

The cement industry uses coal as a source of energy, as well as old tires as an alternative fuel.

Under the old tax regulations, tires were exempt from the provincial sales tax.

The new carbon tax includes a provincial sales tax on tires and increases the tax on coal.

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