Heavy industry tax cut could impose burden on local taxpayers

By Grant Warkentin Mirror StaffJun 21 2006
A huge residential tax hike could be the consequence of a provincially-imposed tax reduction for heavy industry. "The recommendation by the Pulp and Paper Industry Advisory Committee to reduce major industry taxation by 50 per cent and then cap it would trigger an immediate 41 per cent increase to the residential taxpayer in our city - and we already have one of the lowest dependencies on major industry," said Mayor Roger McDonell in an April letter to Rich Coleman, the provincial minister of Forests and Range and minister responsible for Housing.
Based on recommendations by the B.C. Competition Council, the provincial government is considering imposing a tax cap for heavy industry, restricting the amount of taxes municipalities could collect from heavy industry such as Catalyst's Elk Falls paper mill. The city is hoping to discourage the province from going through with the plan because the tax cap would mean a tax hike for residential taxpayers. "The shortfall in revenues as a result of this taxation stimulus policy would fall primarily on the residential taxpayer to make up," McDonell said.
In response, Coleman told McDonell his concerns would be considered. "I will share your letter with my colleagues to ensure the points you raise are considered as we formulate our response to the competition council's recommendations," Coleman said. Campbell River isn't the only community concerned about the effects a tax cap could have on its economy. Corporate Services Director Tom Stevens recently attended a meeting with other member municipalities of the Union of BC Municipalities (UBCM) and he said the concern was unanimous.
"They all voiced concerns about the possibility of the provincial government introducing a tax cap," he said. Campbell River should get the support of the UBCM at the September annual convention, said Coun. Roy Grant. The UBCM represents every municipality in B.C. and resolutions passed at the annual convention can have an effect on provincial policy.
"I think this will send a clear message to the government of where we stand on this issue," said McDonell. In March, the competition council recommended the tax cap as a way to save the coastal forestry industry from falling into worse shape. "Unless these issues are addressed and the conditions are created to allow industry to be competitive, and to attract the capital required for reinvestment, the decline of the forest industry will continue," said council co-chair David Thompson in a news release. Catalyst has been asking the city for a decrease in taxes for several years. However, the city has a plan to gradually reduce them by 2010. "By the year 2010 Campbell River will be receiving only 20 per cent of its municipal tax revenue from major industry, whereas in 2003 we were at 32 per cent," McDonell said in a June 20 letter to the premier. "Were it not for the five-point plan-major industry would have paid $3.3 million more in municipal taxes since 2002."
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