Catalyst Paper Gets Tax Break from Powell River Council

By Laura Walz

March 27, 2009 - Catalyst Paper will benefit from continued tax reductions at its Powell River division.

City of Powell River council voted at the March 19 meeting to reduce major industrial taxation by $250,000 a year over the next four years, a continuation of the $1-million reduction the city initiated five years ago.

"That establishes the 2009 starting tax rate of about $4 million for Class 4 major industry," said Councillor Chris McNaughton, who made the motion.

Council has also directed staff to provide options for repaying half of the Catalyst assessment ruling levied against the company in 2008 and to shift that amount from major industrial to residential. The previous council had increased major industrial taxes in 2008 to recoup revenues lost through Catalyst's successful assessment appeals. Council also directed staff to continue to explore options for opportunities for capital initiatives with Catalyst.

Stew Gibson, general manager of Catalyst's Powell River division, updated council on the company's activities earlier in the meeting.

There is a major shift occurring in North America right now with newsprint, Gibson said. "In 2001, demand for newsprint was over 12 million tons," he said. "We project this year it's going to be less than six million tons."

In January 2009, there was a 30-percent reduction in demand compared to the same month in the previous year, Gibson said. "Some of the big cities are going away from two dailies, Seattle Post being the latest example. We certainly recognize that our industry is changing."

In 2004, Catalyst's five divisions operated 15 paper machines and two pulp complexes, Gibson said. "Right now, we have seven paper machines operating full time and no pulp operations."

As difficult as the industry is, Powell River is fortunate to have three paper machines running, Gibson said. "A lot of effort has been placed into finding what is necessary to be competitive in our industry, while at the same time finding ways to produce products that we know are going to be in demand as the industry changes."

Part of what the division had to do was become smaller to become competitive, Gibson explained, and the company made the difficult decision to lay off 127 employees, which it announced in February.

As well, the company is drawing attention to the amount of property taxes it pays in each of the communities where it operates. "I want to recognize that the response that has been received from Powell River council is important in making these decisions and I understand that continued discussions are going to take place. How we go about addressing the competitive municipal tax situation will always be a factor in how we choose to operate our businesses," he said.

Catalyst is pushing for a consumptive tax model and wants to pay $1.5 million in each of the communities where it operates.

SOURCE: Powell River Peak (published: March 25, 2009)

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