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N.B. companies with forest properties on both sides of U.S. border paying higher taxes in Maine

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N.B. companies with forest properties on both sides of U.S. border paying higher taxes in Maine

Tax assessments, bills in New Brunswick are up, but not on timberland for the 30th year in a row

But that won't be the case for owners of New Brunswick forest properties. 

The group hasn't been handed an assessment increase in 30 years, including again this year, as their share of the property tax burden in New Brunswick, relative to all property owners, continues to shrink.

Dale Firlotte, a paramedic who lives in the recently created New Brunswick municipality of Cap-Acadie south of Shediac, has come to dread the arrival of his assessment notice and property tax bill.

"It'll be like death by a thousand cuts, slowly increasing until we're priced out of our house almost," he said.

Property tax form Property taxes in New Brunswick are due by May 31st. Bill amounts have risen two years in a row for thousands of property owners because of rising assessments, but not for owners of forest properties. (Peter Anawati / CBC)

Firlottte has lived in the same two-bedroom home with his family since 2010 and, based solely on changes in local real estate markets, the assessment on it has risen 89.5 per cent over the past two years.

By law, Firlotte's property tax bill cannot increase by more than 10 per cent per year. He faces a series of annual 10 per cent increases until at least 2028 when the tax he pays on his house catches up to its escalating assessment. 

Barring future tax rate cuts by Cap-Acadie, Firlotte's tax bill is on a set schedule to hit $3,000, up from less than $1,600 in 2020.

"That sort of shocked quite a bit because it's almost double of what we were paying a couple years prior," said Firlotte. "And, if the markets in the area keep on going up, then so will each assessment"

But not every Cap-Acadie taxpayer is under that kind of pressure.

The municipality's single-largest property is a 71.5-square-kilometre forest owned by J.D. Irving Ltd.  The property is assessed and taxed to be worth $711,700, an amount that hasn't changed since 1993.

The Maine State House    In 2022 the state of Maine assessed its forests for taxes to be worth between $330 and $1,500 per hectare. That was up from between $120 and $650 per hectare in 1993. New Brunswick has used the same $100 per hectare assessment for the entire 30 years. (CBC)

Unlike most jurisdictions and all other residential and business properties in the province, assessments on forests in New Brunswick are not allowed to rise as their value increases.   

Instead, assessments are set at a fixed amount by the province and can only be changed by an act of the legislature.

In May 1993, the former government of Frank McKenna set the assessed value of timberland in New Brunswick at $100 per hectare. It has remained at that amount for the last 30 years.

That's not the case in most other jurisdictions, including across the border in Maine, where forests are assessed every year based on their changing values 

"Property taxes are assessed annually," Sharon Huntley, the director of communications for Maine's Department of Administrative and Financial Services, said in an email.

Dale Firlotte poses with his wife and two sons for a selfie. Dale Firlotte, his wife Melissa and two children live in the same Cap-Acadie home the couple bought 13 years ago. For the last two years assessments and tax bills on it have risen sharply. (Submitted by Dale Firlotte)

"They are assessed by either the municipality where the property is located, or by the State."

It's a natural comparison because New Brunswick forest companies J.D. Irving Ltd. and Acadian Timber Corp are two of the largest owners of forest properties in Maine with 640,000 hectares of timberland in the state between them. They also own a million hectares in New Brunswick

Last year, the two faced valuations of $100 per hectare on their New Brunswick woodlands. But, in Maine, assessed values on forest properties range between $330 and $1,500 per hectare. Amounts depend on a forest's location and whether it is a softwood or hardwood forest, or combination of the two. 

Most of the timberland JD Irving and Acadian Timber own in Maine is in Aroostook and Penobscot counties.  Forests in those counties are at the lower end of Maine's property assessment ranges and the two have relatively low tax rates.

A softwood forest There are an estimated 2.8 million hectares of privately owned forest in New Brunswick, almost five times the area of Prince Edward Island. (Radio-Canada)

Still, records published by Maine Revenue Services show the two companies paid an average of more than $4,000 per 1,000 hectares in 2022 on forest land they owned in the state. In New Brunswick they paid, on average below $2,000 per 1,000 hectares

In Cap-Acadie this year, J.D. Irving Ltd. is being taxed $1,648 per 1,000 hectares on its forest property, a slight reduction from two years ago

J.D. Irving Ltd. did not respond to a request for comment about those tax differences.

There are an estimated 2.8 million hectares of privately owned forest in New Brunswick, an area nearly five times the size of Prince Edward Island. 

Much of that forest is in remote areas. In the past, most of the property tax collected on it went directly to the provincial government.   

Premier Blaine Higgs stands at a podium New Brunswick Premier Blaine Higgs told a CBC leaders forum during the 2020 election that fair property taxes among groups in municipalities is "a must" (CBC)

But last year the province created multiple new municipal governments like Cap-Acadie. Many of those now encompass large areas of that timberland as part of their local tax bases.

New Brunswick Premier Blaine Higgs has spoken several times about the need for property taxation inside municipalities to be seen as fair by residents, calling it "a must" in the 2020 provincial election leaders forum, and earlier when he was opposition leader.

"We need to understand that our taxation is fair," said Higgs during a 2017 interview about property taxes in New Brunswick. 

"This has to be fair across the province and across the other provinces so you look at other jurisdictions and you develop a plan that is fair, equitable  and makes sense."

Requests to interview New Brunswick Finance Minister Ernie Steeves or Local Government Minister Daniel Allain about how forestry properties are assessed and taxed in New Brunswick were not granted.

However, in an email, the province said its lower assessments of forest properties are fair because the value of trees they contain are excluded in the taxable amount.

"They are a crop," Jennifer Vienneau, the communications director for Service New Brunswick, said in explaining that the province assesses forests like it does farmland.

Trees are assessed "no more so than potatoes, carrots or broccoli are assessed," she said.

Vienneau also acknowledged the assessment amount used by New Brunswick is meant to keep taxes owed on forest properties "lower" than they would be otherwise.

However,  the province offered no deeper explanation about why an assessed value considered fair in 1993 has not changed in 30 years given 80 per cent inflation in New Brunswick over that time and most other property owners have had to face higher amounts.

ABOUT THE AUTHOR


Robert Jones

Reporter

Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.

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