The B.C. Court of Appeal has rejected a complaint by Catalyst Paper Corp. that the corporate tax rate for its Crofton mill is exceedingly high when compared to the residential rate. The ruling released Thursday by Justice Mary Newbury upholds a B.C. Supreme Court decision that it couldn't overturn municipal tax rates set by the District of North Cowichan. The mill was one of several large resource companies challenging B.C. municipal taxing authority on the issue. The court decision means the companies will continue having to shoulder the tax burden. "I feel it was good that the appeal was dismissed and that our 2009 tax bylaw stands and was upheld," North Cowichan Mayor Tom Walker said in an interview. "I hope this ends the matter. "We had considered all manner of things and came to a decision. But we very much want Catalyst to continue to operate [here]. They [provide] 750 direct jobs. And they also bring a lot of business to the community."
In small-town B.C., one large employer can pay the bulk of the taxes, but the companies have been arguing that in tough economic times the higher rates are unfair. In Catalyst's efforts to reduce costs, it initiated a tax revolt against municipal property assessments. Catalyst has been paying $23 million a year in taxes in the four municipalities where it has mills, but cut it down to $6 million. Catalyst subsequently lost its court challenge to overturn municipal tax rates and is facing penalties on its overdue tax bill. But the company's unorthodox move garnered strong support from other industrial taxpayers and catapulted municipal tax rates into a provincewide issue. However, B.C. Supreme Court ruled that it's up to government, not the courts, to address the issue and that the taxes were legally levied. In her ruling, Newbury upheld the earlier court decision, saying it is a "central principle of democratic government" that elected lawmakers be given the highest degree of deference by courts of law.
She said the District of Cowichan also has to consider the interests of residential taxpayers and declined to make a dramatic change from past practice. Newbury noted that Catalyst's hope lies in the political process if the District of Cowichan deems it important enough to retain Catalyst as an employer and taxpayer. "That, however, would be a policy decision for elected officials rather than a decision for a court of law." Newbury also rejected Catalyst's claim that North Cowichan had not enunciated any objective standards or rational criteria in setting the tax rates. "I do not agree, however, that in order to be reasonable, a decision of a municipal council must be founded on a particular set of objective criteria or even a demonstrably 'rational' policy." Walker said North Cowichan already reduced Catalyst's tax bill by $860,000 in 2009 and is in the process of reducing it another $500,000 this year. "We have to balance [taxes] with the services we have to provide to our community. We recognize the forest industry is going through a downturn." Walker said his door is always open to Catalyst, but that the company still owes the municipality $4.5 million in unpaid taxes. "We expect everybody to pay their tax bill, including Catalyst."
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