City’s annexation of New Gold’s mine could cost company up to $2 million in annual taxes

Boundary extension area.

Boundary extension area.


The City’s effort to annex New Gold’s mine property west of town could result in a maximum of $2 million more in annual taxes for the company.

City administrator David Trawin said Tuesday New Gold is opposed to the annexation because of the financial impact on its tax bill. Currently, the company pays more than $500,000 a year to the province and Thompson-Nicola Regional District.

“New Gold’s been very professional about this. We are working together. It’s basically a philosophical difference.”

The City of Kamloops is applying to annex New Gold’s land within municipal boundaries to help reduce the amount that other heavy industry pays in taxes. Trawin pointed out that New Gold is closer to the centre of town than Lafarge or Tolko — but the latter two pay municipal taxes and New Gold does not.

The City wants to levy a phased-in tax on New Gold that would max out at $55 per mill rate. Depending on the tax situation, that could reach $2 million over a three- to five-year period. It would mean the amount of tax paid by heavy industry would be shared among five companies instead of the current four who have complained their share of the municipal tax bill is too high.

The City has consulted with New Gold, as well as area First Nations, who are also opposed on grounds of aboriginal rights and title, and the TNRD.

Chiefs of the Tk’emlups and Skeetchestn Indian Bands have threatened legal action to halt the City’s annexation efforts.

The bands get 37.5 per cent of mineral tax revenue collected by the province from New Gold, as well as direct sharing.

“I don’t know how that would be affected. We’ve told the bands straight up ‘We’re not interested in screwing you guys over. Were not interested in anything but our tax,’” Trawin said.

“I don’t believe what the City is doing would affect the mineral tax revenue.”

Trawin said he understands the First Nations frustrations with the process. While the City could get through the annexation process in about two years, area bands have been trying to achieve the same goal for the past two decades.

“I’m sympathetic they’ve been trying to expand their boundaries.”

The City is setting up a meeting with New Gold before presenting all details, including how to phase in a tax increase to the company, to City council.

New Gold currently has a fire share agreement with the City, while its employees who live in town benefit from all the offerings other residents enjoy. Trawin noted that the company doesn’t have to fly in food or other supplies that mines in more remote areas do, and the proximity to town makes it easier to attract workers.

“It’s a benefit to them,” he said.

“For all intents and purposes, they’re part of the community. How are they any different than Domtar, Tolko or Lafarge?”

If Domtar shuts down, it will affect other mills in the region, so the impact is multiplied, he said. Taxation is just one part of Domtar’s budget equation, but the rates in Kamloops are higher than in many other B.C. cities.

“It would be bigger than just Domtar going down. So council is aware they’d like to get heavy industry down lower without passing it on to the homeowner,” Trawin said.

Another factor that hasn’t had much discussion but has been the elephant in the room is the proposed Ajax mine.

If the province rejects the City’s application to annex New Gold, there’s a question of what the City will get if Ajax is approved.

“New Gold’s a working mine and Ajax isn’t, but if the ministry turns this down, are they telling us that’s the same that would happen with Ajax? I don’t know,” said Trawin.

The annexation process typically takes six months to two years. With municipal elections coming up in November, Trawin didn’t expect anything will happen until 2015. If annexation is approved, any tax money probably won’t be forthcoming until 2016 or later.

The challenge is, the government usually wants all sides on board. While New Gold and First Nations are opposed, the City and other area heavy industries are in favour. The City is required to go to the electorate for a response, which staff are recommending be done through alternative approval process, he said.

About Mel Rothenburger (8126 Articles) is a forum about Kamloops and the world. It has more than one million views. Mel Rothenburger is the former Editor of The Daily News in Kamloops, B.C. (retiring in 2012), and past mayor of Kamloops (1999-2005). At he is the publisher, editor, news editor, city editor, reporter, webmaster, and just about anything else you can think of. He is grateful for the contributions of several local columnists. This blog doesn't require a subscription but gratefully accepts donations to help defray costs.

6 Comments on City’s annexation of New Gold’s mine could cost company up to $2 million in annual taxes

  1. It only makes sense that the city/citizens of Kamloops should get some kind of benefit for living with the risks associated with heavy industry. I think there should have been more thorough review/assessment and robust public consultation for New Gold before approval – but for the citizens to be exposed to risk with no benefit beyond employment opportunities is not right! Though I certainly understand and support the compensation of First Nations, it seems to me that in this instance that the taxation benefits are not being proportionally or fairly shared. I support the city in addressing this important issue.

    Many First Nations people in our area also enjoy the services and the public facilities in Kamloops and would benefit from having tax dollars spent to improve our city and infrastructure.

  2. Is the city’s potential taxation gain TNRD’s loss?

    • Mel Rothenburger // May 20, 2014 at 1:22 PM // Reply

      The City says there will be no loss of tax revenue for TNRD.

      • Would the city have to go through a similar issue if Ajax is approved?

      • Mel Rothenburger // May 20, 2014 at 10:57 PM //

        Yes, if the City wishes to annex the part of the Ajax property that isn’t already in the City, the process would be the same.

      • Grouchy1 // May 20, 2014 at 7:29 PM //

        Not sure how they figure that one. NG sure isn’t going to continue paying both at the current rates.

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