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The Dark Side to the Possible Return of Counterveiling Duties

By Ben Meisner

A forest industry leader who is speaking on the condition of anonymity says he fears the results if by chance the US Commerce Department returns the $ 5 billion dollars collected in countervailing duties. 

It may look good on paper he said but in reality it could be a disaster waiting in the wings. 

The companies, who have been paying the penalties and writing them off on their taxes, would be required to pay just over 40% in income tax to get the money into their company coffers, but what do they do with the remaining money? 

Let’s say Canfor receives a check for $500,000,000 dollars.  After tax that would amount to around $300,000,000. Now what do you do with that kind of money?  Well if you invest it by buying up other companies, you reduce competition and expand your business making for a better bottom line. 

"That" he said "is my fear. There are a number of mills in this region that could be bought out, one that comes to mind is in Ft. St. James, they have wood tenure and by buying them up with this new found gold, you can expand with money, that for the most part, you had written off."  

Is it a fear for the smaller companies?   “Of course “ he said , "We already have been watching the shrinking of the players in the forest industry in this province, if you hand them over anther $300,000,000 dollars, what do you suppose they will do with it?  Companies such as CANFOR don’t run out and buy hotels, or sailing ships when they are in the forest business and we all know the effects of the shrinking of the players. Its too bad" he concluded , " Had we got the money back earlier I think it would have been used to tool up various companies.  As it now stands there is so much money that acquisition will be the buzz word if the funds are returned."   

He says instead of returning the dollars to  companies, he suggests the Federal Government scoop it up and put into a fund to try and re build the forest from the effects of the Mountain Pine beetle.

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