Yes, you read that right. After surrendering to the U.S. and only getting a portion of our illegally collected softwood duty back from the Bush Administration, the Harper administration will be TAXING the portion of their own money our forestry companies ARE getting back from this deal. The tax windfall could be worth as much as $1 billion to Harper and the provincial governments.
I really should read the business section more often, because otherwise I would have missed this, I think, huge story in the Globe's Report on Business. And Eddie, why wasn't this in the A section anyway, instead of B5?
We get into corporate tax law here, but as ROB explains it Eastern Canadian forestry companies should actually come out OK but companies in B.C. will be getting hosed. Remember when the Reform Alliance was all about standing-up for the West?
In a nutshell, as I read it companies wrote-off duties paid during the dispute, claiming it as an expense for tax purposes, so now that they're getting the money back they need to pay taxes on it. Eastern companies tend to have poor balance sheets so they can defer the payments to the future, but most B.C. companies have healthier balance sheets and can't.
Take Canfor, David Emerson's former company, and the company he still has financial ties to through his pension plan. After taxes ROB says they'll end up with about 55 cents on the dollar, reducing their appx. US$760 million refund to US$475 million.
My take on the softwood deal itself is basically that it sucks, but I don't think they could have done much better with the Americans. It's a defeat and shouldn't be celebrated, but life sucks sometimes.
But this tax situation is something Harper can do something about, though. He's trying to shore up his strength in B.C., how are they going to react to news of Harper's tax windfall at their expense?
Ottawa, provinces could get $1-billion
STEVEN CHASE AND PETER KENNEDY
OTTAWA, VANCOUVER -- As a final indignity, Canadian softwood producers will have to pay tax on the $4-billion in U.S. timber duties they stand to recoup under a deal between Ottawa and Washington to settle the five-year-dispute.
This would mean a potential revenue windfall for Ottawa and the provinces of $1-billion if all companies end up paying tax on the duties.