Alberta Softwood Lumber Trade Council Statement on Federal Surge Tax Assessment

    EDMONTON, June 3 /CNW/ - The Alberta Softwood Lumber Trade Council
(ASLTC) today provides information regarding actions taken by Alberta lumber
producers in response to the Government of Canada's assessment of a penalty
tax under the Canada-U.S. Softwood Lumber Agreement (SLA). The tax relates to
a March 2007 surge in lumber exports from Alberta to the United States that
occurred as a result of a tracking error on the part of the federal
    Under the SLA, when lumber prices are low, softwood lumber shipments from
Canada to the U.S. are subject to export taxes and/or quotas. Alberta and B.C.
companies shipping lumber to the U.S. are subject to export taxes of up to
15%. If total regional exports to the U.S. exceed a pre-determined volume in
any month when an export tax applies, then all exports are subject to an
additional "surge" tax equal to 50% of the tax rate for that month.
    To allow companies to individually monitor regional shipment volumes, the
Department of Foreign Affairs and International Trade (DFAIT) posts daily
lumber export data to a website. As the only source of total export data, the
DFAIT website is the sole mechanism by which Alberta or B.C. lumber companies
can individually assess the likelihood of surge, and make shipping decisions
accordingly. This makes the website's accuracy critical to the avoidance of
punitive taxes.
    Alberta lumber exporters have now been advised by DFAIT that the
Department had inadvertently posted inaccurate information to its website with
respect to Alberta export levels, resulting in a surge in March 2007. The
inaccuracy consisted of the inclusion of U.S. exports from an Alberta sawmill
among export volumes attributed to B.C. As a result of the DFAIT tracking
error, Alberta exporters were led to believe, incorrectly, that their
shipments in late March 2007 were well below surge-trigger levels.
    On April 23, 2008, DFAIT revised its website to indicate that Alberta had
exceeded the surge trigger level in March 2007. On April 24, the Canada
Revenue Agency (CRA) issued a notice requiring Alberta companies to pay, by
May 31, 2008, additional taxes totalling approximately $2.5 million.
    When accurate data has been posted to the DFAIT website, individual
Alberta producers have consistently adjusted their shipping patterns to
maintain total export volumes below surge-trigger levels. The ASLTC disagrees
with the assessment of the surge tax on the basis that, if correct information
had been posted for March 2007, Alberta producers would not have surged.
    Alberta producers who exported to the U.S. in March 2007 have had to
determine their own responses to the assessment of the surge penalty tax on an
individual company basis. The ASLTC believes all or most affected companies
have elected to pay the surge charge by the May 31st deadline, and at the same
time to advise the CRA that they intend to retain their right to pursue
remedies relating to the Government of Canada's provision of erroneous
    The ASLTC has held numerous discussions with federal government
representatives, seeking to achieve a resolution of this matter that would not
financially penalize Alberta lumber producers for an error that was not of
their making. The Council continues to pursue cooperative discussions with the
federal government, believing that a resolution that is fair to Alberta
producers, and that meets the requirements of the SLA, remains achievable.

    The Alberta Softwood Lumber Trade Council is an industry group
representing the interests of 29 Alberta lumber producers on issues relating
to trade with the United States.

For further information:

For further information: Trevor Wakelin, Chair, Alberta Softwood Lumber
Trade Council, ph: (780) 486-8213 or (780) 446-8920

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