VANCOUVER – B.C. civic leaders are rallying around a handful of cities where major industries have refused to pay their tax bills, citing unreasonable industrial tax rates.

Catalyst Paper is in court fighting to quash the rates it pays Campbell River, Port Alberni, North Cowichan and Powell River on its local pulp and paper mills, and has left some of those municipalities with millions of dollars in unpaid taxes.

Other regions are also affected.

Castlegar Mayor Lawrence Chernoff told delegates at the Union of B.C. Municipalities convention Tuesday he was stunned when major employer Celgar told the city on the last day day taxes were due that it wouldn’t pay the mill’s full bill.

“There was no notice, no warning, no sign,” Chernoff said.

Castlegar council, facing the loss of 40 per cent of its budget, immediately moved to shelve planned spending.

Affected cities will be forced to slash services or else see their residential and other non-industrial tax rates skyrocket if the mill operators win.

“They are open, accountable levels of government that have made lawful decisions in their council chambers in the presence of their taxpayers and citizens and we should support them,” Saanich Mayor Frank Leonard said, drawing applause.

Every city in the province should join the fight on principle, added North Cowichan Coun. Al Siebring.

He pointed to Catalyst’s argument that it pays a much larger proportion of taxes than the share of civic services it uses.

“I call that tax anarchy,” Siebring said. “The day will come that residential taxpayers will say to you ‘I haven’t had a fire at my house and I don’t throw any wild parties – I’m not paying for police and I’m not paying for fire.’ That’s the kind of model that this leads to.”

Burnaby Mayor Derek Corrigan said B.C. cities are on the cusp of a tax revolt by industry.

He said he’s particularly alarmed the corporations involved have withheld taxes.

“These corporations are extorting these small municipalities by holding back sometimes half the taxes they receive,” he said. “It’s the kind of bullying tactics corporations used in the 19th century. And should be unacceptable now in the 21st.”

Corrigan said cities in Metro Vancouver fear a slippery slope where pressure instead comes not just for industrial but also business tax rate cuts.

“There are many, many municipalities around British Columbia who say it may be them first, then it’s us.”

Some UBCM delegates said they fear the province could soon impose a broad cap on industrial tax rates – as it has already done with property taxes paid by ports and railways.

Business Council of B.C. executive vice-president Jock Finlayson said that’s one option, and he argued the forest industry in B.C. needs property tax reform.

He said forest companies are “weak and fragile” as a result of “ferocious” international competition, a rising Canadian dollar and the global recession.

Finlayson said B.C. property tax rates for industry are on average 6.34 times higher than residential – a ratio that’s significantly higher than other provinces.

“There’s a wider provincial interest to maintain a diverse economy,” he said.

But Gerry Armstrong, an adviser on the issue to the UBCM, said forest companies in B.C. stand to save $140 million in taxes a year through B.C.’s planned Harmonized Sales Tax – almost as much as their entire $160-million property tax bill to local cities.

Armstrong warned the issue is likely to be dragged out by appeals and may well end up in the provincial government’s lap, no matter which side wins, leaving affected cities facing big budget holes for some time.

Castlegar Mayor Chernoff said his council is contemplating a cut in industrial rates and he says it could be worse – unlike other parts of B.C. the Celgar mill there is still running and employing local people.

“We’re a lucky city in that there is a mill left to talk to.”