Vancouver has lost almost a million dollars in property taxes since the province launched its Port Competitiveness Initiative in 2004 -- unilaterally capping municipal taxes that port businesses pay.

The same pinch is being felt in varying degrees in other cities spanning the sprawling port, all of which play host to the docks, terminals and traffic that make up operations at Canada's busiest marine centre.

The provincial government plans to introduce a bill this spring to extend the cap, initially set in place until 2009, until 2018. A staff report by financial analyst Karen Levitt will urge Vancouver city council this week to voice its objections to Premier Gordon Campbell and a handful of his key ministers.

The report notes that the cap has already cost the city some $800,000 by limiting the property taxes paid by private companies that work in the port through tax caps and tax exemptions.

At the time the initial cap was implemented, municipalities were offered compensation to offset lost revenues. But the amount, which for Vancouver amounts to about $42,000 a year, was calculated using 2003 tax figures and has not been adjusted -- and won't be for the extended period, although inflation will be taken into account.

"While the provincial compensation amount has remained fixed at approximately $42,000 each year, annual lost revenues have been between three to 11 times greater than this amount."

The city has also lamented -- unsuccessfully -- policing costs for the port area that it inherited after disbandment of the federal ports police force in 1997.

Vancouver Mayor Sam Sullivan says the problem is all part of the ongoing issue of what he calls the "municipal fiscal imbalance." He's lobbied Victoria to address it in budget planning now under way, and will talk to federal officials next month during a visit to Ottawa.

Vision Vancouver Coun. Raymond Louie said the city objected when the cap was put in place, and should still do so. If Victoria wanted to assist ports in remaining competitive, it should have used provincial money for the move. The city's tax base, which has to cover its services, "is already small enough."

"If they wanted to [help the port], they should have paid for it themselves."

It's a position all eight port municipalities -- Vancouver, Port Moody, North Vancouver, Burnaby, Surrey, Richmond, Delta and the District of North Vancouver -- took at the time the cap was imposed. "We have no objection to provincial and federal spending to make the port industry more competitive'" said Port Moody Mayor Joe Trasolini.

"But they should spend their money, not ours. In other words, ports serving a provincial or federal need should not be subsidized by local property taxpayers simply because they have a port within their municipal boundaries."

For Port Moody, the cap meant a 35-per-cent decrease in taxes paid by port industries -- or an increase of nearly three per cent for municipal taxpayers.

cmontgomery@png.canwest.com