B.C. pulp mills refusing to pay taxes

Two B.C. pulp and paper companies say their municipal tax bills are too high and they are refusing to pay up, leaving several rural communities wondering how they'll cover their own bills this year.

Castlegar Mayor Lawrence Chernoff said he learned of the tax revolt just hours before the tax deadline when the local local pulp mill, Celgar, notified the city that instead of paying its $3.6 million tax bill, the company is planning to fight it in court.

Mercer, the company that owns the Celgar mill in the B.C. Interior, told the city the tax rate is unfair in today's economic climate, and they have asked the courts for a judicial review of what it claims is an "unreasonable tax rate."

The Catalyst pulp and paper company is also refusing to pay its taxes, and that will likely affect several South Coast municipalities, including Campbell River, North Cowichan, Powell River and Port Alberni.

Both companies say they want the B.C. Supreme Court to amend their tax bills, but turned down requests from CBC News for interviews.

Celgar's taxes represent almost half of Castlegar's total budget, leaving the mayor wondering how the city is going to pay staff.

"It's huge. I've been in politics for a long time but I was absolutely shocked when this was dropped on my desk," Chernoff told CBC News.

B.C.'s forestry industry has seen a large number of mill closures and thousands of job layoffs in recent years stemming in part from the global economic crisis.

Robert Hobson, president of the Union of B.C. Municipalities, said the move is unprecedented and there are other ways to appeal municipal taxes.

"It's totally outside the parameters of the tax system for an industry to say, 'We don't like the tax rate. We're not going to pay the taxes.' Imagine if other citizens did that, what that would do," said Hobson.

Hobson said it's time the provincial government stepped in and helped come up with a settlement.

"Those tax rates are set to provide services for people and businesses in the community, so for any taxpayer to simply say, 'We are not going to pay our taxes,' has an immediate impact on a local government to provide the services that are needed," said Hobson.