BC Stats published the monthly numbers for log exports to November 2014. The number reinforce arguments made in a recent Times Colonist Op Ed. An excerpt:
B.C. government has gradually abandoned the province’s forestry heritage in pursuit of an unsustainable pipe dream: liquefied natural gas exports to Asia. The better option — for a resilient economy and for our climate — is to rebuild an innovative, sustainable forestry sector.BC Stats reports the quantity of raw logs exported and the value. Both trends are troubling.
That’s not to say that forestry doesn’t have its own problems.
The current industrial model that has dominated forestry in western Canada is based on endless extraction and minimal domestic processing of timber resources. This approach has harmed watersheds and degraded entire ecosystems.
At the same time, we’ve seen more unprocessed or under-processed timber leave the province, resulting in a downward spiral of mill closures and layoffs. Clearly, this model is failing our forest ecosystems and forestry-dependent communities and families.
British Columbia lags far behind other jurisdictions in terms of jobs created per unit of timber harvested. In B.C., to create one full-time, year-round job we must cut 1,189 cubic metres of timber — one cubic metre roughly equals one city telephone pole. In Ontario, the forest industry produces one job for every 205 cubic metres of timber harvested, meaning they can cut the same amount of trees and employ almost six times as many people (or cut one-sixth of the trees and provide the same amount of jobs)...
The graphs immediately suggest the possibility of transfer pricing schemes. A few years ago, The Guardian newspaper did a series on tax avoidance and one article was Shifting profits across borders:
In recent days the Tax Gap series of articles has identified secrecy, complex organisational structures, tax havens and profit hungry accountancy firms as the key ingredients of the tax avoidance industry. They all come together in the biggest tax avoidance scheme of all, known as "transfer pricing". The name of the game is to shift profits to low tax jurisdictions and avoid taxes in countries where corporations have substantial trading operations.I raise a point made before by this blog. In Understaffed and incapable, by design, I wrote,
...There are international rules on transfer pricing, but they all rely on notions of "costs" which are highly malleable. Tax rules require companies to use "arm's length" or normal commercial prices to transfer goods and services, but such prices are not always easy to find. Many markets are thin and often dominated by the same multinationals...
...material revenues were failing to reach government coffers because industry routinely undervalued and under-reported production. The individual said this continued because government's enforcement resources were inadequate to ensure collection of amounts properly due. An additional allegation was that mid-level officials were aware but believed corrective action was not welcome at the highest levels.If forest conglomerates are avoiding taxes by accounting schemes, the BC government has few resources to prevent fraud and protect the public interest. Sadly, for BC Liberal leaders, that may be a considered strategy.