Canada: cement industry appeals for carbon tax relief

Canada: cement industry appeals for carbon tax relief
Published: 09 July 2008

The new carbon tax in B.C. may be revenue neutral for taxpayers, but representatives of the concrete industry 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) is planning to write a letter to the new Finance Minister Colin Hanson later this month to express their concerns about the impacts of the carbon tax on the construction industry.

“The increase in the cost of concrete has made our industry less competitive with other materials at a time when the B.C. construction industry is in a volatile position,” said Carolyn Campbell, executive director of the B.C. Ready-Mixed Concrete Association (BCRMCA).

“We have three plants in the province that are subject to the carbon tax. We don’t want to see those plants shutting down.”

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

The BCRMCA also argued that the carbon tax will decrease concrete’s competitiveness in the international marketplace against other building products, which will increase volatility in the B.C. construction market and make province’s cement facilities vulnerable to plant closures.

“If the price of concrete gets too expensive and plants in B.C. are shut down, we will have to go to Asian markets to import concrete,” said Campbell. “The countries that don’t have as much regulation will be more competitive.”

In turn, the carbon tax may increase emissions.

“This will not reduce emissions,” said Campbell. “It will just shift emissions overseas. On top of this, there will be an increase in emission from the transportation of concrete.”

The Cement Association of Canada (CAC) also has serious concerns about the impact of the carbon tax on B.C.’s cement industry.

“In terms of the cement industry in B.C, this will hit us hard,” said Pierre Boucher, president and CEO of the CAC.

“More than $65 million in taxes will be imposed on the cement industry by the carbon tax over the next five years. The industry will get back only $5 million in corporate tax cuts and rebates.”

The cement industry uses coal as a source of energy, as well as tires which are an alternative to coal.

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.

In her letter to the finance minister, Campbell recommends that the provincial government work with the BCRMCA to create and distribute reliable information on products and best practices to assist in the adoption of fuel efficient technologies and strategies for their fleets.

The BCRMCA wants the provincial government to provide a combination of rebates, tax credits, PST exemptions and low-cost or no-cost grants or loans to help the industry invest in appropriate strategies and technologies.

In particular, they ask the provincial government to exempt waste-derived fuels such as waste tires from the carbon tax.

The BCRMCA also wants the government to support actions outlined by the Cement Association of Canada to facilitate the substitution of secure, economically justifiable, and environmentally beneficial supply of biomass-based energy sources for cement manufacturing operations.

These supplies are not currently available to the sector, which leaves no alternative but to pay the punitive tax on an essential fuel inputs.