uToronto Paper on New Municipal Tax Options

By Joey Coleman // @JoeyColeman
Published: Nov 27 2016 (7 months ago) // Last Updated: Nov 27 2016 (7 months ago)

A timely paper from the Munk School of Global Affair's Institute on Municipal Finance and Governance (IMFG) released last week says Canada's largest cities need to find new sources of revenue, and must create new taxes to meet the demands of local populations.

Paper authors Harry Kitchen (Professor Emertius, Economics, Trent) and Enid Slack (Director IMFG) are leading experts on Canadian municipal finances and focused their paper on Vancouver, Calgary, Edmonton, Winnipeg, Toronto, Ottawa, Montréal, and Halifax.

The paper's key message is that municipalities should be linking public spending to revenue decisions.

(In the context of Hamilton, this would mean no longer using reserves to fund new spending - this spending eventually must be funded by incoming revenues, but with no source identified, this spending seems to be surprise Council at budget time)

Some of the highlights from the paper (Blockquotes direct from paper):

For services with “private good” characteristics (such as water, sewers, transit, garbage collection and disposal, and
most recreation), user fees are efficient and fair. In general,
user fees should be adopted wherever there is a clear link between the fee charged and the benefit received.

When this link is in place, the taxpayer can choose the amount of the
good he or she wishes to consume. Equity concerns can be
addressed either by targeting lower-income individuals with
existing provincial income-transfer programs or by lowering
or waiving fees for low-income users.

Services with “public good” characteristics (police and fire protection, neighbourhood parks, local streets, and street
lighting) generate collective benefits that are enjoyed by all
local residents. Benefits from these services cannot be assigned to individual beneficiaries and therefore, specific charges cannot be levied. In lieu of charges, then, some form of local benefit-based taxation such as the property tax should be adopted. A city sales tax and personal income tax could also be used to pay for services with public good characteristics.

Services that redistribute income should be funded from income tax revenues because it is the most progressive tax
available. For cities, these services include social assistance
and social housing.

Read the full paper:


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