BC Ferries has received a bit of a nasty shock, the purchase of the Sonia (seen left passing through the Panama canal) may end up costing them an extra 17.7 million dollars as Industry Canada debates the merits of taxing the Ferry corp. for purchasing a ferry not built in Canada.
It’s federal taxation initiative that is designed to try and keep Canada’s ship building industry in a competitive position, by making the cost of buying vessels off shore a costly bit of business. Although it seems to have had little effect with BC Ferries and their recent dealings with a German ship builder for the new generation of ferries to come.
And while BC Ferries suggest they may apply for a break on those ships as well, one would think they won’t have much success on that request. There has been more than enough lead time on the new class of ferries to come, some of which surely could have been contracted out to a Canadian shipyard, in the case of the new ferries to come the levies are more than fair and deserved.
Industry Canada’s possible decision on the Sonia, however has a number of politicians and ferry executives in BC just a little chagrined at the prospect of having to pay out more money for the vessel. They are especially annoyed with the developments, after they had worked as expeditiously as possible to replace a vital transportation link in Canada. The purchase of the Sonia its supporters suggest was purchased after an exhaustive search within Canada and out side of the nation and remedies an immediate need, thus they believe the tax should not be levied.
The Daily News featured the story on the front page of Friday’s paper, but by late Friday afternoon there were indication that saner minds might be prepared to prevail. As the bureaucrats at Industry Canada said that BC Ferries had not filed the proper papers with the proper department, the indication being that if the paper work is in order and delivered to the right office there’s a good chance the fee will be waived.
A welcome dose of common sense in this one instance, should it come to pass.
For now we’ll provide the details of the tax and what is behind it as reported by the Canwest News Service for Friday’s Daily news.
IMPORT TAX PUSHES UP COST OF SONIA BY EXTRA $17.7M
Federal Government charging the fee because vessel was not made in Canada
‘By Canwest News Service
The Daily News
Friday, December 8, 2006
Pages one and two
VICTORIA—The Queen of the North’s replacement vessel will be slapped with $17.7 million in federal duties and tax when she sails into Victoria mid-December – an unjust penalty given the tragic circumstances, B. C. Transportation Minister Kevin Falcon said yesterday.
“They’re going to do $9 million of refit work here in British Columbia before that ferry goes into service. And to charge an unnecessary $17 million tax, I think, is just wrong,” Falcon said.
The $51 million MV Sonia, traveling from Greece, is transiting the Panama Canal today and is expected to arrive in Victoria about Dec. 18. It will replace the Queen of the North, which sank in March, killing two passengers.
Upon the arrival of the two-year old European car and passenger ferry, B. C. Ferries must pay 25 per cent of the purchase price and on any portion of the refit done overseas. The bill is estimated at about $15 million in import duties, plus more than $2 million in GST> B. C. Ferries spokeswoman Deborah Marshall said yesterday.
The Sonia will dock at Victoria Shipyards, which has a $9 million contract to modify the vessel to be in service April 2007.
Import duties are meant to protect the shipbuilding industry and related jobs in Canada.
B. C. Ferries applied to the federal government for a duty remission, saying, it was unable with such a short deadline to find a replacement ship in Canada, Marshall said.
But the waiver doesn’t look as if it will happen as “crunch time” nears, she said.
“We’re disappointed that we are getting indications the application will be rejected,” Marshall said. “It’s not formally rejected but that’s what we’re hearing.”
The duty is mandated by Industry Canada, but a waiver involves Canada Border Services and the federal Finance Department. A finance official said from Ottawa yesterday that he could not confirm whether the application has been rejected.
Falcon said the decision to waive duty fees should be a no-brainer because to build a ferry in Canada would take years.
“It should be refunded, no question about it,” Falcon said. “To penalize B. C. Ferries and, ultimately ferry riders, makes absolutely no sense to me. And I’m sure it makes no sense to British Columbians.”
But it makes perfect sense to B. C. Shipyard Workers’ Federation president George MacPherson, who said in an interview yesterday that B. C. Ferries is spending nearly $1 billion to build ferries in foreign shipyards instead of in B. C.
Over the next five years, B. C. Ferries plans to add seven new ships at a cost of about $900 million.
Of those, three new Super C class vessels are being built at a cost of close to $600 million by Flensburger Schiffbau-Gesellschaft (FSG) in northern Germany, to be in service early in 2008. The same German shipyard will build the $133 million replacement for the Queen of Prince Rupert.
B. C. Ferries must pay import duties on all of those ships and will apply for duty remission, Marshall said.
“Kevin Falcon waved goodbye to 5,000 jobs and nearly a billion-dollar investment in B. C. and now he wants $17 million back from Ottawa?” McPherson asked.
Duties help offset the cost of national shipbuilding research and development, and support a loan program that reduces costs for Canadian purchases of ships built here.
“I take issue with Kevin Falcon setting his hair on fire over this issue,” MacPherson said. “As long as the ship can be built in Canada, the duty must be paid.”
It’s federal taxation initiative that is designed to try and keep Canada’s ship building industry in a competitive position, by making the cost of buying vessels off shore a costly bit of business. Although it seems to have had little effect with BC Ferries and their recent dealings with a German ship builder for the new generation of ferries to come.
And while BC Ferries suggest they may apply for a break on those ships as well, one would think they won’t have much success on that request. There has been more than enough lead time on the new class of ferries to come, some of which surely could have been contracted out to a Canadian shipyard, in the case of the new ferries to come the levies are more than fair and deserved.
Industry Canada’s possible decision on the Sonia, however has a number of politicians and ferry executives in BC just a little chagrined at the prospect of having to pay out more money for the vessel. They are especially annoyed with the developments, after they had worked as expeditiously as possible to replace a vital transportation link in Canada. The purchase of the Sonia its supporters suggest was purchased after an exhaustive search within Canada and out side of the nation and remedies an immediate need, thus they believe the tax should not be levied.
The Daily News featured the story on the front page of Friday’s paper, but by late Friday afternoon there were indication that saner minds might be prepared to prevail. As the bureaucrats at Industry Canada said that BC Ferries had not filed the proper papers with the proper department, the indication being that if the paper work is in order and delivered to the right office there’s a good chance the fee will be waived.
A welcome dose of common sense in this one instance, should it come to pass.
For now we’ll provide the details of the tax and what is behind it as reported by the Canwest News Service for Friday’s Daily news.
IMPORT TAX PUSHES UP COST OF SONIA BY EXTRA $17.7M
Federal Government charging the fee because vessel was not made in Canada
‘By Canwest News Service
The Daily News
Friday, December 8, 2006
Pages one and two
VICTORIA—The Queen of the North’s replacement vessel will be slapped with $17.7 million in federal duties and tax when she sails into Victoria mid-December – an unjust penalty given the tragic circumstances, B. C. Transportation Minister Kevin Falcon said yesterday.
“They’re going to do $9 million of refit work here in British Columbia before that ferry goes into service. And to charge an unnecessary $17 million tax, I think, is just wrong,” Falcon said.
The $51 million MV Sonia, traveling from Greece, is transiting the Panama Canal today and is expected to arrive in Victoria about Dec. 18. It will replace the Queen of the North, which sank in March, killing two passengers.
Upon the arrival of the two-year old European car and passenger ferry, B. C. Ferries must pay 25 per cent of the purchase price and on any portion of the refit done overseas. The bill is estimated at about $15 million in import duties, plus more than $2 million in GST> B. C. Ferries spokeswoman Deborah Marshall said yesterday.
The Sonia will dock at Victoria Shipyards, which has a $9 million contract to modify the vessel to be in service April 2007.
Import duties are meant to protect the shipbuilding industry and related jobs in Canada.
B. C. Ferries applied to the federal government for a duty remission, saying, it was unable with such a short deadline to find a replacement ship in Canada, Marshall said.
But the waiver doesn’t look as if it will happen as “crunch time” nears, she said.
“We’re disappointed that we are getting indications the application will be rejected,” Marshall said. “It’s not formally rejected but that’s what we’re hearing.”
The duty is mandated by Industry Canada, but a waiver involves Canada Border Services and the federal Finance Department. A finance official said from Ottawa yesterday that he could not confirm whether the application has been rejected.
Falcon said the decision to waive duty fees should be a no-brainer because to build a ferry in Canada would take years.
“It should be refunded, no question about it,” Falcon said. “To penalize B. C. Ferries and, ultimately ferry riders, makes absolutely no sense to me. And I’m sure it makes no sense to British Columbians.”
But it makes perfect sense to B. C. Shipyard Workers’ Federation president George MacPherson, who said in an interview yesterday that B. C. Ferries is spending nearly $1 billion to build ferries in foreign shipyards instead of in B. C.
Over the next five years, B. C. Ferries plans to add seven new ships at a cost of about $900 million.
Of those, three new Super C class vessels are being built at a cost of close to $600 million by Flensburger Schiffbau-Gesellschaft (FSG) in northern Germany, to be in service early in 2008. The same German shipyard will build the $133 million replacement for the Queen of Prince Rupert.
B. C. Ferries must pay import duties on all of those ships and will apply for duty remission, Marshall said.
“Kevin Falcon waved goodbye to 5,000 jobs and nearly a billion-dollar investment in B. C. and now he wants $17 million back from Ottawa?” McPherson asked.
Duties help offset the cost of national shipbuilding research and development, and support a loan program that reduces costs for Canadian purchases of ships built here.
“I take issue with Kevin Falcon setting his hair on fire over this issue,” MacPherson said. “As long as the ship can be built in Canada, the duty must be paid.”
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