Municipal leaders run the risk of over-taxing BC ports into extinction. Predatory property taxes are driving the competitiveness out of BC ports and US rivals are lapping up the lost business.

A recent ruling from the BC Property Assessment Appeal Board found that the Terminal Systems container business at Roberts Bank must shell out $4 million per year in property taxes to Delta. The ruling is another blow to the tax-besieged port industry.

Property taxes on ports have ballooned since 1984 when the province allowed municipalities to charge variable tax rates for different property classifications. Residential tax rates in the District of North Vancouver stayed constant while ports saw their tax bill climb from $800,000 in 1989 to 1.7 million in 2001, according to a report by the British Columbia Wharf Operators' Association.

The municipal tax rate on ports in Vancouver is nine times higher than tax rates on residential properties. And the District of North Vancouver charges a tax rate on ports eleven times greater than residential. What for? It can hardly be argued that ports enjoy eleven times the municipal services that homeowners receive.

Meanwhile, BC ports are losing business such as cruise ship sailings to rival ports in Seattle. US ports enjoy the policy of tax rate parity, meaning ports, homeowners, small business and any other property classifications all pay the same tax rate. And unlike BC ports, US ports pay no property taxes on non-leased port land.

The end result is that BC export terminals are levied a property tax rate of 3 to 6.9 percent of assessed value compared to a low 1.3 percent tax rate charged on US ports.

A low Canadian dollar kept BC ports in business but that single competitive edge has all but disappeared in the wake of the loonie's mercurial rise. Closing the property tax gap with the US will also require a new assessment valuation.

The BC Assessment Authority establishes property values based on the selling values of comparable properties. But port authorities, in accordance to the Canada Marine Act, cannot be sold or used for non-port activities.

If they can't be sold, they cannot be compared to the set values of other sales data. Nevertheless, the Assessment Authority classifies ports as "heavy industrial" - the property classification with the single highest tax rate.

The economic fall out from predatory property taxes would be staggering. The Vancouver Port alone employs about 52,000 people and posts about $2.9 billion in annual economic activity. It pays $1 billion in wages and $620 million in taxes to government. Can British Columbia afford to let another industry fall by the wayside?

The effects of high property taxes cripple not only existing port business but ensure that new investment and job creation occurs south of the border. Based upon 2001 tax rates, a $10 million port investment in the District of North Vancouver amortized over a period of 20 years would cost over $12 million in property taxes, argue the BC Wharf Operators' Association. If property tax rates continued to rise at its current pace, the total property tax take would jump up to $20 million. That's twice the cost of the $10 million investment itself.

Riots would break out if residential property taxes climbed to double the market value of homes but ports are expected to cough up the cash even at their own peril.

Unfair property taxes on ports are investment killers and job killers. Long term investment planning in port facilities are nipped in the bud by the disincentives inherent in high property taxes.

BC ports will find their sea legs again once municipal politicians release the property tax burden. Parity in tax rates will have to be phased in over time to recover lost business opportunity. The Assessment Authority should also find a suitable property classification and assessment valuation system that reflects the true value and use of BC ports.

Plucking too many feathers from the goose that lays the golden eggs will eventually run her dry and shift the tax burden on small business and residential homeowners - an intolerable proposition. BC taxpayers are better off with a competitive port industry that pays its fair share of property taxes instead of a dying industry that increasingly can afford none.