A Sault Ste. Marie mill operator calls the Ontario government's decision to appeal an Ontario Superior Court judge's ruling "obscene" and accuses Queen's Park of trying to put him out of business.
Jim Boniferro says the appeal could jeopardize the 50 mill jobs of his hardwood operation and 100 forestry contractors in the Algoma district.
The Ministry of Attorney General served on a notice of appeal on behalf of the Ministry of Natural Resources (MNR) against Boniferro Mill Works Feb. 20 challenging Ontario Superior Court Judge's Gary Tranmer's decision in January that the residual value charge (RVC) is an illegal tax.
An angry Boniferro expressed surprise at the ministry's decision knowing the government is fully aware of his struggling company's financial stresses as disclosed in court documents.
In January, Boniferro won his court case against the government in challenging the legitimacy of the residual value charge, one of four provincial stumpage fees in the Crown Timber Pricing system.
Tranmer ruled January 23 the Crown had "no lawful authority to impose the collect" the charge. Boniferro is entitled to more than $1.3 million paid since he purchased the mill from Domtar in 2003
Boniferro Mill Works was the first Ontario company to challenge the legitimacy of the residual value charge that's paid by forest product companies for harvesting on Crown lands.
Boniferro wonders if the appeal is a deliberate strategy by Queen's Park to drag out the process until he's out of business.
"For them to carry on (to appeal), they know we can't afford it and there's a good chance we go bankrupt before we finish the trial."
Stumpage fluctuates according to market prices of lumber, panels, paper and pulp. It ensures the Crown reaps some financial rewards from strong forest product markets. Though instituted in 1994, the charge imposed by the MNR never had any legislative approval.
David Bauer, spokesperson for Natural Resources Minister Donna Cansfield, was unable to comment because the matter still remains before the courts.
"We can't comment on the specifics....but there's no question the forest sector is going through difficult times. That's why the ministry is committed to investing $1 billion in the forestry sector over five years to help restore the competitiveness of the sector."
Bauer says there are "certain ways we can sit down with Jim Boniferro as has been done in the past."
He added, "Hardwood saw mills have not had to pay residual value component of stumpage since July 2007."
Surprisingly, the stumpage matrix for the RVC was pulled from the MNR's web pages in February. The charges, which fluctuate slightly, are posted at the beginning of every month.
Last year, the government hired KPMG to review the value charge system. The ministry received a preliminary draft of the survey of hardwood operators but staff were still reviewing the information this winter.
Boniferro is disappointed the government is using taxpayer dollars to fight him and keep those industry dollars.
"As a taxpayer, I find that distasteful and unbelievable."
Boniferro says he doesn't have the financial resources to keep fighting in court.
Wood product prices haven't improved but demand is up, he says, and the company has a strong order book.
But with only seven days of log inventory going into spring break-up, he was looking at a lengthy mill shut-down and layoffs into June, "if we can survive that."
Boniferro says the money paid in charges could have been better spent upgrading his saw line and buying new equipment.
His mill produces more than a million board feet a month, and between 12 and 15 million board feet annually.
Boniferro says with recent winter layoffs and mill closures in Dubreuilville and Kenora, "If there was a time to help the industry, today is not the day to launch an appeal against us."
In January, Ontario Forest Industries Association (OFIA) president Jamie Lim called the successful court challenge of the (RVC) a "victory" for all hardwood mill operators.
Lim said Ontario had become a "uncertain jurisdiction" that is shunning major corporate investment because of government policy and onerous fees.
She hoped the prior ruling would push the government toward adopting similar hardwood dues to British Columbia, Alberta and Saskatchewan which range between 50 to 57 cents per cubic metre. Ontario dues are 800 per cent higher at $4.28.
