No Tax on Lumber Shipments to the States

By 250 News

Due to strong lumber prices, effective June 1, B.C.'s softwood lumber producers will no longer pay any tax on their shipments to the U.S., Forests and Range Minister Pat Bell announced today.

"In two months, the export tax has dropped from 15 per cent to zero because of higher lumber prices," said Bell. "While prices have softened over the last week, and will likely continue to fluctuate, no export tax during June on lumber shipments to the U.S. means companies will have more cash available for re-investing in their mills."

Under the 2006 Softwood Lumber Agreement, companies exporting softwood lumber to the United States are required to pay an export tax on their shipments. The formula for determining the tax is based on the average price over a four-week period 21 days before the start of the month. The higher the average lumber price is, the lower the export tax.

In this case, since the four-week average lumber price, as given by the Random Lengths Framing Composite Price Index, is now $US361 per thousand board feet, the export tax rate that will be in effect June 1, will be zero. If lumber prices decrease again, the export tax will be re-applied.

In May, the export tax had dropped to 10 per cent based on the strength of lumber prices in March and early April, which was the first time that the export tax dropped since the Softwood Lumber Agreement came into effect in October 2006.

Random Lengths framing lumber composite prices are published each Friday.  Today's price was $US358. The export tax is collected at the border by the Canada Revenue Agency and then the tax paid by B.C. producers is re-
directed to the provincial government.

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