Catalyst Paper Corp. has staged a tax revolt against four B.C. municipalities, but has just lost one of those fights. Catalyst Paper Corp. has staged a tax revolt against four B.C. municipalities, but has just lost one of those fights. (Catalyst Paper Corp.)

A southern Vancouver Island community has won the first round of a tax battle with one of B.C.'s major pulp and paper companies.

Catalyst Paper Corp. had refused to pay its full municipal tax bill to four Vancouver Island municipalities, arguing in B.C. Supreme Court that the tax rate was unfair.

Supreme Court Justice Peter Voith said in a judgment released Friday that bylaws setting Catalyst's tax rate in North Cowichan are sound.

Now other B.C. communities that are home to Catalyst mills are hoping for similar results.

Catalyst is also challenging tax rates in Campbell River, Port Alberni and Powell River, paying just $6 million of the $23 million in taxes it owes the municipalities.

North Cowichan Mayor Tom Walker said he wasn't the only one who should be pleased with a ruling upholding his municipality's industrial tax rates. The decision has implications for towns around B.C., he said.

"If one class of taxpayer like heavy industry, well then, what's next? Is it business, residential?"

Rates 'not unacceptable'

Catalyst had petitioned for a judicial review of industrial property rates, which the company argues can be anywhere from 10 to 20 times residential rates.

In his ruling, Justice Voith said North Cowichan's rates are high but not unacceptable.

Voith also ordered Catalyst to pay North Cowichan's legal costs.

"Let's hope that it comes to an end sooner than later, and that common sense prevails," said Port Alberni Mayor Ken McRae.

The company is considering an appeal.

"The point, of course, is that the judgment itself doesn't change the reality that the levies on our mills are inequitable, unaffordable," Catalyst spokeswoman Lyn Brown told CBC News.

North Cowichan is about 65 kilometres north of Victoria.