Tuesday, June 09, 2009

It's pay the tax you want day, says Catalyst

Property taxes are too high, complains Catalyst Paper Corp. (Like a lot of big industrial taxpayers in communities across B.C.)
Can't pay, won't pay, the corporation insists, to quote Italian playwright Dario Fo.
Instead, Catalyst's president says it will write cheques to four B.C. municipalities based on what it has decided its taxes should be, based on services used.
And that's about one-quarter the tax the municipalities - Campbell River, Port Alberni, Powell River and North Cowichan - have been receiving.
Catalyst says it's willing to pay $1.5 million in Campbell River. Its actual tax bill is $4.6 million, down 10 per cent from last year.
That would leave the municipality $3.1 million short this year, with two solutions. It could raises taxes 20 per cent for residents and small business to make up the difference. Or it could start laying off staff and cutting services for residents.
And Campbell River is in relatively goååçod shape. North Cowichan residents would face a 70-per-cent tax increase to make up the amount Catalyst has decided not to pay.
Catalyst is playing rough. If the municipalities don't go along, the company says it will close one of the four mills, based on tax rates and the willingness of the union local to accept concessions.
It's also challenging the tax levies in B.C. Supreme Court under the Local Government Act, arguing the taxes are "unreasonable." (That actually might be good news for the municipalities. The section of the act the company is relying on says that taxes or fees must be paid even if they are being challenged.)
This isn't really about Catalyst. It's about the end of B.C's. first 150 years. The colony, and then province, has offered extraordinary riches. Big trees, easy to get from the woods and highly sought after. Gold, coal, energy. A lot of buyers and not too many competitors. And money for everyone - owners, companies, employees and towns.
Times have changed, and the adjustments are wrenching - and mostly unhappy.
The mill and mine owners weren't just being kindly when they took on a big share of municipal costs. They needed employees and wanted a stable workforce, which meant families had to be lured. Paying taxes for an arena and policing and parks created the kind of community that ensured a stable workforce. The companies had the money, in those days. And there was even some goodwill and social responsibility involved.
Now, Catalyst looks at competitors in other places paying one-tenth as much in taxes and decides its responsibility to shareholders comes first.
There's no easy good guy/bad guy choice in all this. Industries have a legitimate grievance. Municipalities have been trying to address the issue - they have cut the company's taxes by a combined 11 per cent this year, after several of tax cuts.
This isn't a new issue. More than three years ago, the B.C. Competition Council - chaired by former NDP premier Dan Miller - said industrial taxes were putting operations at risk of closure. It called for a 50-per-cent cut. (Catalyst is proposing a 75-per-cent cut.) The Premier's Progress Board has raised similar concerns.
But the province hasn't acted on the warnings. (Rich Coleman suggested towns across B.C. should cut spending to reduce the industrial tax burden.)
Catalyst and the municipal governments agree on one thing - the provincial government should be involved in this dispute.
Catalyst acknowledges the municipalities would be in big trouble if it didn't pay its tax bills. It says the province should provide several years of transitional funding to allow them to cut services or shift the costs onto other taxpayers.
That too has risks, especially if this is to be repeated across the province.
But the current deadlock is destructive for everyone involved.
It's time for the provincial government to get off its hands and lead.
Footnote: The Liberals' lack of interest in the issue could be strategic - staying out of the negotiations creates a pressure on Catalyst and the municipalities to compromise. Or principled - letting the market decide on business and jobs survival. Or lack of interest.


Declan said...

"There's no easy good guy/bad guy choice in all this. Industries have a legitimate grievance."

For someone like me who hasn't been following the case, could you clarify what makes the grievance legitimate in this particular case - I'm sure there are many people who would be happy to lower their tax take if they had enough economic power to credibly threaten the government so that they could get away with it.

If you can't pay your taxes you are bankrupt, no?

Norm Farrell said...

Try not paying property taxes on your home for three years and see what happens. It's a long established tradition called tax sale.

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