City of Powell River’s committee of the whole heard two opposing viewpoints regarding preferential industrial taxation for Catalyst Paper Corporation.
The catalyst was the city’s consideration of a continued preferential tax rate for major industry, announced at a special council meeting on Thursday, May 8, for residents to comment on the city’s five-year financial plan.
At the meeting on Thursday, June 5, councillors heard first from retired millworker Hans Brennert, who is in favour of industrial tax breaks. Speaking second was Murray Dobbin, who opposes concessions. He was the founding president of Canadians for Tax Fairness and a columnist for the Financial Post. More than 20 residents were in the council chamber’s gallery to listen to the two presentations.
Brennert, representing Catalyst Salaried Employees and Pensioners (CSEP) Advocacy Association, said members are strong supporters of Catalyst and depend on its ongoing operation to support their pension plan.
“We know that the loss of Catalyst would have far-reaching negative effects on our city, impacting health care resources, real estate values, transportation services, recreation opportunities, our retail and hospitality sectors and support for our arts community,” he said. “Also, the population would likely shrink.”
Brennert said Catalyst has not received financial assistance from the province. He said three provincial factors have a significant effect on Catalyst’s bottom line.
The reintroduction of the provincial sales tax has added about $12 million a year to Catalyst’s costs, Brennert said. Significant increases in BC Hydro rates have occurred and are anticipated to continue for at least four more years, he said. The new provincial recycling program is also adding cost to conducting business, he added.
“Now, in the midst of this very challenging business environment, Catalyst is faced with the possibility of an increase in their municipal taxes,” he said. “We respectfully ask that you as our council support continued operation in our community through implementing a fair, competitive level of taxation on an ongoing basis.”
Councillor Jim Palm said the city will do everything in its power to make sure that Catalyst continues operating in Powell River. “We know how valuable and important it is to all of us,” he said.
“I think Powell River has demonstrated in the past that we’ve gone above and beyond,” said Mayor Dave Formosa. “The city took great hits, as did the residents and business, I think for a good cause. Now council has to weigh, do they renew this revitalization program?”
Dobbin said he has vigorously opposed tax cutting at the provincial and federal levels for as long as he can remember.
“I happily pay my taxes—property and income and sales taxes—because I believe that taxes are the price we pay for a civilized society,” he said. “But because we live in a society where the economy creates great inequality, it is critical that taxes be fair.
“Council is now considering whether or not to extend the special industrial tax rate, which only applies to Catalyst. In my judgment, such an extension would be a mistake, and that it was never an effective policy tool.”
Dobbin said municipal taxes account for a tiny portion of Catalyst’s operating costs. Municipal tax breaks, however, amount to a significant amount of money for the city.
“Between 2005, when the subsidized rate was established, and 2015, we will have lost over $29 million in revenue,” he said. Everybody else pays for the “special treatment” of Catalyst, he added.
“I strongly urge city council not to extend the special industrial rate for Catalyst.”
Formosa said he agreed with a lot of what Dobbin said. However, had the city not taken the steps it did, he believes Catalyst would not be operating in Powell River.
Formosa also said he has heard No. 9 paper machine requires a $4-million electrical upgrade and he does not believe Catalyst has that money. Tax breaks, he said, could help the company make the upgrades to keep the paper machine running.
City council played the original tax concession the way it thought it should, Formosa said. He does not believe that Powell River is Catalyst’s bright light. That distinction goes to the Cowichan mill, he said.
“I think Powell River’s status in that corporation is not as good as we would hope.”
If the mill did close, the city would have to find a purchaser.
“If not, it’s a 26- or 27-per-cent tax hit,” he said. “That would be devastating. We’ll try our best and work with what we have.”
