High municipal tax burdens drive business out of town, but a tax revolt in British Columbia has shown that municipal governments are able to do more than just raise taxes -- if left with no other choice.

Small businesses and large industries toil under an unsustainable property tax burden in British Columbia. With small business, the effects slowly come to light, but with large industries, the effect is more obvious.  Surrey, for example, is doing a good job promoting business growth with low business property taxes, unlike Vancouver and Victoria. Surrey has one of the lowest business property tax burdens of all municipalities in B.C.

What is the result?  Surrey is growing faster than Vancouver and Victoria in terms of population growth, growth in the labour force, and even school enrollment.

Property taxes have a big impact on the economic viability of a community. If high business property taxes slowly drain the lifeblood of a community, it's not so noticible. But when a city's biggest employer leaves town, the impact is more obvious, and more drastic.   

However, when a municipal government is no longer able to just increase business or industrial property taxes, it finds new ways to work with business to solve its tax and spend problem. That's exactly what we're now seeing in Powell River, one of the towns with a Catalyst mill.

In the summer of 2009, Catalyst Paper said it could no longer afford to foot the massive property tax bill charged to it by the four towns where its mills operate. The company said it was more than happy to pay for the services it received, but that was only $6 million of the $23 million in taxes it paid. It took the case to court and lost, but the mill town councils have woken up to the fact that if the mill shuts down and moves its factory to China, there will be no tax revenue at all, ever, from that mill again.

The Powell River city government, in a surprising moment of illumination, made a deal with Catalyst to have the mill treat the city's liquid waste and biosolids using the mill's effluent system and waste water boiler. The city will pay Catalyst for this service, which will be subtracted from its property tax bill, and this will bring the bill down to the level Catalyst wanted.

This also saves the City from having to spend about $20 million on a new waste treatment facility.

This is a win for Catalyst, a win for the city council and best of all, a win for the taxpayer.

By: Maureen Bader
Posted: April 26, 2010
Topic: British Columbia

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