Editorial: Tax gamble

City of Powell River council’s upcoming decision on how much to tax Catalyst Paper Corporation requires a delicate balance between understanding the Powell River mill’s precarious financial situation and collecting the major-industry tax the city requires.

A suggested increase of $300,000 for the next three years is a modest benchmark for a corporation currently paying $2.8 million per year in taxes, but does not come close to the nearly $5 million it paid a decade ago.

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City council, led by mayor Dave Formosa, claims to have an acute understanding of the mill's financial situation and it would be the first to say that the close to $14 million in tax relief Catalyst has received over the past 10 years probably saved the Powell River mill from closing.

Now that Catalyst is a privately held company, it is understandable that city council is trying to determine the tipping point on how much tax is too much tax for the paper corporation.

If the mayor and councillors decide to err on the side of caution and ask for a lower amount, they will never hear the end of it from taxpayers for what will be deemed an excessive tax break. If they ask for too much from Catalyst, the looming threat of a mill closure from the corporation is never far behind.

The fact is, Catalyst has been working hard to reinvent itself over the past few years by moving away from newsprint and toward specialty paper production.

With new food- and medical-grade paper and paper towel products currently slated for full market production in the coming months, the hope is that Catalyst will have a viable future in Powell River for years to come.

Raising major-industry taxes by $300,000 for three years is not an aggressive move by council, but it is also not an overly cautious one. Three years from now, the hope is that Catalyst's Powell River mill will once again pay the full amount of taxes it owes.

After Campbell River's mill closed in 2009, that city lost 98 per cent of its major-industry tax base, property taxes for homeowners doubled and business taxes increased almost 60 per cent.

It is easy to say we should be charging Catalyst more tax now, but at this point Powell River, led by city council, needs to ask itself if that is a gamble it is willing to take.

Jason Schreurs, publisher/editor

Copyright © 2018 Powell River Peak


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