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Catalyst Paper Says BC Property Taxes Out of Whack

June 27, 2006 - Catalyst Paper said that at $31 million, its 2006 property tax bill remains virtually unchanged from last year—a sign that some British Columbia municipalities are still ignoring the stifling effect of high industrial taxes on business competitiveness, innovation and reinvestment plans.

According to Catalyst, the company continues to spearhead the call for government action on the tax issue, citing figures that show it pays twice as much per tonne of product in property tax than the North American average.

The problem has grown more acute as municipal mill rates and tax bills have not come down to reflect permanent reductions in production capacity at several mills, Catalyst said.

In past months the damaging impact of high industrial taxation was noted in reports by the Fraser Institute, BC Chamber of Commerce, BC Progress Board, C.D. Howe Institute and the Business Council of British Columbia. The C.D. Howe study published in February 2006 called for municipal limits on the property taxes on business and greater reliance on residential property taxation and user fees.

"Our taxes are out of line with other parts of North America; they're not even competitive with other parts of BC," said Russell J. Horner, president and chief executive officer.

"The irony is that municipalities put their own future at risk when they subsidize the true cost of services to all residents by relying so heavily on one tax class. Those that don't fix this will see capital investment go elsewhere," Horner added.

Despite repeated appeals for fair treatment, taxes rose in four Catalyst operating communities and for the Vancouver head office. Only Powell River, which pledged in 2003 to cut mill taxes by $1 million over five years, reduced its bill to the company.

Property Taxes Paid by Catalyst Division      2006      2005
--------------------------------------------------------------
Crofton (North Cowichan)                      $8.3 M    $8.0 M
Elk Falls (Campbell River)                    $8.1 M    $8.1 M
Paper Recycling (Coquitlam)                   $1.3 M    $1.3 M
Port Alberni                                  $7.4 M    $7.4 M
Powell River                                  $6.1 M    $6.3 M
Vancouver                                     $167 K    $160 K

SOURCE: Catalyst Paper




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