Taxes on Canada Lumber Exports to U.S. to Drop

(Reuters – Allan Dowd)

Lumber prices have recovered enough to allow Canadian forestry firms to begin paying a lower export tax on softwood shipments to the United States starting in May, British Columbia officials said on Friday. Data released on Friday showed the North American lumber price over the past four weeks has averaged $325 per thousand board feet, high enough to reduce the tax rate paid by Western Canadian sawmills to 10% from 15%.

It marks the first time that lumber prices have been high enough to allow for a tax rate reduction since the taxes were imposed under the 2006 U.S.-Canada Softwood Lumber Agreement, British Columbia Forests Minister Pat Bell said. Major lumber producers in British Columbia and Alberta include West Fraser Timber, Canfor, Tolko Industries, and International Forest Products.

Eastern-headquartered producers include Tembec and Domtar, which recently announced it was selling its mills to newcomer Eacom Timber Corp. Sawmills in Central Canada, whose exports are subject to a combination of export taxes and shipment quotas, will see the tax rate drop to 3% from 5% and quota restrictions ease slightly. Read more here.