Corporate tax cuts…

Thanks to Pale Cold this morning for her post on Fantasy Island over at ACR, I got to thinking about Corporations and their tax cuts.  According to the neo-cons, these tax cuts are essential to promote jobs by way of infrastructure and research and development.  I really don’t see that happening and here is my case in point.  Pale mentions Jack Mintz, who penned a study in favour of the HST in BC.  Aside from the fact that the aforementioned study contradicted his previous paper [against] the HST, Pale points out that Jack Mintz sits on the board of Imperial Oil, as well as Brookfield Asset Management.  Brookfield Asset Management happens to own Island Timberlands.

 

Island Timberlands LP
Brookfield launched its first private timberlands fund, Island Timberlands LP, with the 2005 acquisition of 635,000 acres of fee simple timberlands in British Columbia, Canada.  This fund is focused on growing and harvesting high quality timber and other forest products for a broad customer base primarily located in Asia and North America. Recognized as one of the best sources of large Douglas-fir, hemlock and cedar in North America, Island Timberlands is the second largest private timberlands holding in British Columbia and the second most valuable private timberland estate in Canada.

Three years later, Brookfield revealed it’s intention,

Brookfield Asset Management, which owns 50 per cent of one of Vancouver Island’s largest forest companies, Island Timberlands, is spinning off its timber and power assets into a Bermuda-based partnership to create an offshore investment vehicle…

…Being based in Bermuda, the new company will have an international board of directors and is expected to be exempt from certain Canadian taxes and the enforcement of Canadian civil judgments.

Here is a Corporation, merged and morphed into an offshore, tax-exempt entity that feels entitled to realize huge profits while avoiding Canadian taxes and duties.

Income statements show that despite the generally depressed forest economy in B.C., Island Timberlands posted net income of $32.1 million on log sales of $184 million for the nine months ending Sept. 30, 2007. By comparison, Western Forest Products, a company under common control of Brookfield that operates sawmills and logs Crown land in the same region, lost $12.9 million over the same nine-month period.

Log exports: The U.S. Pacific Northwest has made significant investments in modernized sawmills, resulting in a three billion board-foot, or 29-per-cent increase, in regional sawmilling capacity over the last five years. “This increase in capacity, combined with conservation-related reductions in harvest levels, has made the U.S. Pacific Northwest an attractive timber market.” Because of their high fixed costs, the U.S. sawmills continue to operate in depressed markets, such as the one the industry is now experiencing.

Real Estate: Island Timberlands has 14,000 hectares of Vancouver Island identified as “higher and better-use” properties that could be developed or sold for conservation purposes. It values those lands at $104 million. In the nine months ending Sept. 30, 2007, it sold $14 million of those properties for a net gain of $7 million. Two other forest companies, TimberWest Forest, and Western Forest Products, have attracted broad public concern on the Island for selling off parcels of their own timberlands.

As a beneficiary of 5 generations of logging on Vancouver Island, I have to restrain myself from being too excited about this business model.  First of all, it’s a corporation without a social contract.  By that I mean, for every stump they create they are supposed to provide jobs, replant trees and pay municipal and provincial taxes.  In reality, they eliminate jobs and contract out the replanting to companies who regularly hire temp workers from other countries, so that the social contract is further muddied and misunderstood.

This has been the trend in BC for too long.  Robber Baron mentality gone wild.  The colonial model of conducting business.  Cowboy mentality.  It does not work for the people, or for communities.