Catalyst calls for action on major industry tax issue



    RICHMOND, BC, July 7 /CNW/ - Catalyst Paper's 2008 property tax bill for
its five BC divisions and head office came in at more than $30 million -
almost the equivalent of the company's capital spending budget for these
divisions in 2008.
    Catalyst has focused sharply on cost reductions, in part, to offset the
huge appreciation of the Canadian dollar which eroded revenues by more than
$500 million since 2002. This year, the company pared back capital spending to
basic maintenance and select projects as it adjusted to a series of market and
industry challenges.
    "Reinvesting in our mills to better meet the requirements of a much more
competitive world is very difficult in the current business climate. Coastal
municipalities are over-taxing major industry (MI) and this puts jobs and
local economies at risk," said Richard Garneau, president and chief executive
officer. "Elsewhere, paper mill taxes are based on services provided by the
municipality rather than on assessed property values which, in our case, show
major industry taxpayers heavily subsidize the residential class."

    
    2008 Mill Rates in Catalyst major operating communities (per $1,000 in
     assessed value)
    -------------------------------------------------------------------------
    Crofton              Elk Falls          Port Alberni      Powell River
                         (Campbell River)
    -------------------------------------------------------------------------
    MI   Residential     MI   Residential   MI   Residential  MI  Residential
    -------------------------------------------------------------------------
    $48.57  $1.84     $43.85   $3.29     $58.97    $5.46    $40.90   $3.15
    -------------------------------------------------------------------------

    While Catalyst applauded recent provincial government action to reduce the
school levy on major industry over a two-year period, the company continued to
appeal for a provincial policy - such as a ratio and assessment cap - to
accelerate corrections and create a long-term affordable property tax
structure for all tax classes.

    2008 BC Property Taxes Paid by Catalyst - $30.5 million
    -------------------------------------------------------------------------
    Crofton     Elk Falls   Port        Powell      Paper       Lower
                (Campbell   Alberni     River       Recycling   Mainland
                River)                             (Coquitlam) (Richmond/
                                                               Surrey)
    -------------------------------------------------------------------------
    $8.5 M      $7.6 M      $6.5 M      $6.0 M      $1.4 M      $0.5 M
    -------------------------------------------------------------------------
    

    Catalyst mills pay double the BC industry average in property tax per
tonne of production and approximately three times more per tonne than the
North American average. In meetings with municipalities, Catalyst has pressed
civic leaders to adopt the same fiscal and budget discipline as the company
has shown.
    In 2006, the BC Competition Council report called for property tax reform
to bring major industry rates in the province closer to the level of other
North American jurisdictions. Among the remedies proposed by the BC
Competition Council was a provincial cap on the ratio by which industry and
business taxes can exceed residential taxes.
    The recommendations reflected the results of a study in 2003 that found
the municipal major industry ratio in some BC communities with pulp and paper
facilities was as high as 19.5 - well above the provincial average at the time
of 6.0. That ratio increased to 26.4 in 2008 for Catalyst's Crofton pulp and
paper mill.
    Catalyst is a leading producer of specialty printing papers and
newsprint, headquartered in Richmond, British Columbia, Canada. The company
also produces market kraft pulp and owns western Canada's largest paper
recycling facility. With six mills strategically located within western North
America, Catalyst has a combined annual capacity of 2.8 million tonnes of
production.  Catalyst's common shares trade on the Toronto Stock Exchange
under the symbol CTL.

    %SEDAR: 00000638E




For further information:

For further information: Lyn Brown, Vice-President, Corporate Relations,
(604) 247-4713

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