Sault Ste. Marie wants action on Essar Steel back taxes

The city of Sault Ste. Marie is putting Essar Steel on notice.

The municipality is owed millions of dollars in backtaxes by the steelmaker, and that number is growing. Sault Ste. Marie Mayor Christian Provenzano says it is highly unusual for a company to stall on paying its taxes when it's under creditor protection.

"Whatever [the company's] opinion is on what its actual taxes should be, it certainly has to believe that it should pay some taxes," he said.

"This is where I have a real issue with the conduct of the company. To pay no taxes is completely inexcusable. So if you think your tax bill is high, that's fine. Make those representations, make those arguments, and we'll have an intelligent and reasonable discussion about that. But to not pay at all, is not a reasonable position."

Essar has been under CCAA [Companies' Creditors Arrangement Act] protection since November of 2015.

The City of Sault Ste. Marie, Ont. is appealing to the courts to try to get Essar Steel Algoma Inc. to pay property taxes municipal officials say haven't been paid in years.

The steelmaker owes about $26 million to the city, Mayor Christian Provenzano told CBC. He says that number will jump to $30 million by next year.

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"It adds up really, fast," he said. "This has been ongoing for a number of years and frankly the city doesn't believe that the current conduct of the company is appropriate."

Provenzano acknowledged the company is currently going through the creditor protection process under the Companies Creditors Arrangement Act, but maintained that in such situations, property taxes are often paid to municipalities.

"This a really rare set of circumstances," he said.

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The courts previously stayed the payment of taxes by the company to the city, Provenzano said, but did not cancel them outright. He said the city is now appealing to the courts for payment, saying that circumstances have changed and the money owing should be paid.

Taxes owing 'passed along'

The company's ongoing creditor protection issues are affecting people in the community, Provenzano said, adding that if the city isn't successful in settling the outstanding tax bill, "that's just ultimately passed along, one way or the other, to the ratepayers."

"All of these people: the trade creditors, the business people that were involved in Essar, the pensioners, the employees all of these people are the same people that pay our taxes," he said.

"It hits them again."

If the city doesn't get paid, Provenzano said council will have some tough decisions to make.

Click here to listen to Sault Ste Marie's mayor on CBC's northern Ontario afternoon show Up North.