BRITISH COLUMBIA Corporate tax cuts hit towns like ‘tidal wave’ Special to the Tribune For a small community struggling to Keep afloat in the sluggish waters of a single resource economy, a retroactive reduction on MacMillan Bloedel’s property assess- ment is like being “hit with a tidal wave,” according to Powell River Mayor Colin . Palmer. Palmer was referring to the devastating effect of M&B’s successful appeal of its pulp mill assessment which left the tiny commun- ity owing the forest giant $4.3 million in previously collected taxes. But the Powell River crisis, now one year old, was merely the opening act in a scena- rio unfolding around the province as a string of stunned, single-industry towns are facing costly pay-backs to corporations which have been successful in winning reduced property tax assessments -from provincial assessment authorities. On Vancouver Island the trend is marked by the recent victory of M&B in Nanaimo. After three years of appeals, M&B finally won a 17 per cent reduction on its property assessment for its Harmac pulp mill at Duke Point last December. The city of Nanaimo has already refunded $2.9 million in taxes to M&B, and is scheduling a 1987 municipal tax increase to cover the two per cent loss to the city’s tax base resulting from Harmac’s amended value. In Campbell River, Crown Forest Industries — owned by New Zealand mul- tinational Fletcher-Challenge — has been appealing its Elk Falls pulp mill assessment since. 1983. Ottawa hit | for silence Canadian government silence over the latest U.S. nuclear weapons test was the target of a protest by some 100 people in Victoria Feb. 5. Sporting black armbands, and bearing placards demanding the Uni- ted States “stop nuclear tests,” members of the Physicians for Social Responsibility, Veterans Against Nuc- lear Arms, and other peace groups Staged a silent vigil outside the federal building on Government Street. The demonstration was organized by the Greater Victoria Disarmament Group to dramatize Ottawa’s silence in not protesting the U.S. test despite its effect in breaking the Soviet’s unilat- eral moratorium. The latest nuclear blast at the Nev- ada test range, performed with virtu- ally no advance announcement Feb. 3, was the target of protests in Van- couver and elsewhere last week. In the U.S., disarmament groups charged that the test had been moved by the Defence Department to pre- empt planned protests. The USS. test, the 20th it has con- ducted since the Soviet Union . announced its unilateral moratorium on testing Aug. 1, 1985, was linked to the development of Star Wars sys- tems. It was conducted in defiance of Soviet warnings — echoed by several U.S. Congressman — that a new U.S. test would give the USSR no choice but to resume its own testing program, suspended for 17 months. The Victoria Disarmament Group Stated that it would mount other demonstrations any time that a nuclear test or a cruise missile test was scheduled. It asked peace activists to contact the organization at 384-2455 in the event a test is announced. 4 Assessment change forced cash-strapped Powell River to borrow money from MacMillan-Bloedel — to pay M-B’s refund. Although the company is expected to lose the current round of court battles, it may _ next put its case before the Supreme Court of Canada in its bid for a reduced assess-— ment. And elsewhere on the Island, M&B has, with no appeal battle, had its 1987 assess- ment rolled back on its sizable Port Alberni plant. For small communities with precarious economies, this all translates to significantly less cash for municipal coffers, regional ditricts, schools and hospitals. In the landmark Powell River case, the town had salted away $400,000 in reserve in case M&B won its appeal. But city officials were completely unprepared for the $4.3 million tax refund they were ordered to pay in December, 1985. “Tt’s like being hit with a tidal wave as far as we’re concerned,” nmayor Palmer told the Tribune in an interview. ’ Even more devastating, the town of Powell River had to borrow $3.9 million from M&B and the province on a ten-year loan at nine per cent interest to pay off the debt to the forest giant. This leaves the beleagured town with an annual loan repayment of $578,000 top- loaded on to its annual municipal budget of $10.6 million for the next decade. In addition to the staggering debt, Powell River’s tax base has been reduced by 14 per cent as a result of the amended assessment given M&B. To compensate, residential tax rates were increased by 19 per cent, and commercial rates hiked by a lesser amount. Palmer said Powell River is now the lead- ing case in what has become a province- wide trend of reductions on industrial property assessments, and he has put out a call for unity among municipal govern- ments. “There are 17 other resource-based communities in B.C. that are being ham- mered by this, and we need some relief.” He said all the mayors involved hope to’ meet jointly with provincial Municipal Affairs Minister Rita Johnson and Finance Minister Mel Couvelier by the end of the month. All properties in B.C. are assesed by the 2 e PACIFIC TRIBUNE, FEBRUARY 1 1, 1987 MacMillan Bloedel skyline at Port Alberni (top) and M-B plywood mill: cutting the corporate municipal tax rate and making residents pay. B.C. Assessment Authority created through ~ legislation in 1974. Prior to 1974, each municipality was responsible for assessing its properties as well as setting the tax rate. “For the sake of some degree of equity around the province, property assessment was made a Crown responsibility,” ex- plained Nanaimo-Cowichan Area Assessor Len Smith. “We come forward with an assessment of market value, and then that’s turned over to the tax levying body to place the appprop- riate tax on it.” Local governments have the right to con- test the decisions made by the Assessment Authority, but the cost of taking on a town’s biggest employer and taxpayer may be greater than a tax refund. Nanaimo city administrator Grayden Hayward agreed the city could have inter- vened in M&B’s Harmac appeal, but said the process would have been too costly. But former Lake Cowichan school trus- tee Bill Routley said there’s nothing equit- able about the current system of property assessment which has the provincial government calling the shots. “This has drastically hurt rural British Columbia,” Routley said in an interview. “An unfair share is being born by the residential taxpayer and homeowner while business and industry now have govern- ment on their side.” In Port Alberni, where the town’s econ- omy is driven by M&B, the lumber giant was given a 19 per cent reduction on its 1987 property assessment without a battle and “4n recognition of physical considerations,” according to the Port Alberni Assessment office. - The mill town’s residential and commer- cial property assessments for 1987 are down by four and six per cent, respectively. M&B’s Port Alberni property, which includes a pulp mill, a plywood mill, two sawmills and a loading dock, accounts for almost all of the town’s industrial property and provides nearly 50 per cent of the © annual municipal budget. : City Manager Jim Sawyer said no overall tax increase is planned for Port Alberni in | 1987, but agrees taxes in some sectors will have to be increased to offset the reduced tax base. ; While Vancouver Island communities — are left gasping for air in the wake-of | reduced property assessment on their pulp mills, the Canadian Pulp and Paper Assoc- iation has just announced a record year for — industry shipments in 1986 and predicts — 1987 will be better still. Association economist David Wilson _ announced last month the industry will have to work at 98 per cent capacity (the highest level in 15 years) to meet worldwide — demand in 1987. Elsewhere around the province the story of reduced assessments for industry is replayed with differed multinationals in the starring roles. The districts of Sparwood, Elkford and Fernie are faced with a debilitating tax repayment to Shell Resources for the Lion Creek mine, and Tumbler Ridge is battling its own goliath over reduced property assessments on lucrative mining operations in its region.