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The bulletin is prepared by John Sewell, the site manager, with the assistance and under the guidance of the advisory committee. It is published monthly, and is being sent to a wide range of people across Canada. Past copies of the bulletin will be archived in this section of the site.

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Bulletin No. 68, November 2006
Local Government Bulletin No. 68, November 2006

The purpose of this bulletin is to focus debate on the need to increase local self-government in Canada and to help local communities achieve more autonomy. The local self-government website is: http://www.localgovernment.ca .
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In this issue:
1. Finding the money that cities need
2. Property Tax Review Again
3. A national urban agenda
4. Subscribe to the Bulletin
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1. Finding the money that cities need

David Miller, the current Mayor of Toronto who appears likely to be re-elected on November 13, 2006, has made municipal funding an issue in his election campaign.

Money is a serious problem for Toronto. City staff report that in 2007 City Council needs to find an extra $518 million to balance its budget, a significant amount in a budget of about $7.5 billion. That money could be found by raising the property taxes (an increase in the 20 per cent range would be needed, and that’s highly unlikely); by substantial reductions in spending; or by a combination of both.

Mr. Miller’s election platform has the following proposal on page 7:

“Obtain a source of revenue that grows with the economy – just as Ottawa and Queen’s Park have enjoyed for decades. Toronto deserves a one-cent share of the existing GST or PST as it is impossible to build a great city on the property tax base alone. This would ad $455 million a year to the City’s budget.”

(His web site is http://www.millerformayor.ca . This quote is from http://www.millerformayor.ca/visionPages.php?pageID=149&subPageID=692 .)

This strategy is not much of a change from what Mr. Miller has been advocating for the last three years. He will again be asking other levels of governments to raise money through their own taxation and then turn it over to Toronto. It was a strategy that worked with Prime Minister Paul Martin and Premier Dalton McGuinty, who agreed to transfer a portion of gas taxes (see Bulletin No. 58 for details) to Toronto and other municipalities. But it seems unlikely to be successful with Prime Minister Stephen Harper, who is sitting on an even larger pile of gold that was available to Mr. Martin.

An alternative strategy has been suggested by six candidates for Toronto City Council, one that says the city should get the legislated power to levy it’s own taxes. The announcement was made in mid-October by Amarjeet Chhabra, Garry Green, Ed Shiller, John Sewell, Adam Vaughan and David White. A portion of their announcement reads as follows.

“If senior governments are unwilling to enter into a long term agreement to cover [current costs for major items including transit, housing and social services], City Council should seek legislation permitting it to levy a Goods and Service Tax, a sales tax, and a tax on incomes generated from work in Toronto. For instance, if the city had been able to take over the one per cent decrease in GST instituted by Premier Stephen Harper, this one per cent could generate about $1 billion a year in Toronto. That would be significant in resolving Toronto’s financial issues in a way which very few Torontonians would object to. City Council should also seek the support of neighbouring municipalities for these new tax sources.”

The complete proposal can be found at http://www.johnsewell.ca/issues/index.cfm?sec=5&id=42

This issue of additional revenue sources had been raised in part of the secret discussions about the New City of Toronto Act (see Bulletins No. 56, 57, 61, 63, and 64 ). All reports at that time indicated city representatives said they did not want any new revenue sources since it feared political opposition. Unfortunately the new City of Toronto Act does not give Toronto the ability to raise either a sales tax or a goods and service tax - new legislation would be required.

A goods and services tax would probably raise about the double the revenue of a simple sales tax in Toronto - there’s some question as to exactly how much revenue a one per cent GST would generate in Toronto; Miller’s estimate seems low - and it would seem to be a more equitable tax.

2. Property Tax Review Again

Vancouver is now embarking on what many other municipalities have done – a review of property taxes. Council has established a Commission (its membership is still being selected) to make recommendations “concerning the distribution of property taxes among the different classes and to provide Council with a strategy for enhancing the stability and predictability of property taxes from year to year”. The full terms of reference may be found at www.vancouver.ca/taxcommission

The great stumbling block to property tax reform – reform which is sorely needed in every province in Canada – seems to be the fact that while property tax is a major source of revenue for municipalities, all of its mechanisms are controlled at the provincial level. It is a classic case of the level of government that has the control bearing none of the consequences of doing a bad job. If municipalities are required to rely on a property tax as a major source of revenue, surely they should be given the legislative power to shape that tax in ways that make sense for it. It would be a matter of lodging the authority and responsibility in the same body - generally a good principle about government. and long overdue in the property tax field.

3. A national urban agenda

It has been ten months since Stephen Harper was elected and became Prime Minister of Canada. There have been no significant announcements about the relationship of the federal government to municipalities and big cities. The government made no response to the report of the commission chaired by Mike Harcourt on that relationship, perhaps because Harcourt was an appointee of the former Martin government. One must assume that Mr. Harper does not have much interest in urban matters.

The Canada West Foundation has reviewed this matter in an article by one of its senior researchers, Dr. Loleen Bardahl. She concludes that we should not get particularly upset, given that she thinks that in the end Mr. Harper’s government will actually address issues in urban Canada. The full text of her review can be found at http://www.cwf.ca/abcalcwf/doc.nsf/file/D6CB9DAB89163E42872571DA00556CD4/$file/wcp082706.htm

She states: “The rhetoric [of the Harper government] may not be as pretty, and the movement forward may not be as fast as some would like, but the end result will still be an investment in Canada's big cities.”

Hmmm. That seems like the argument that says no news is good news. But it’s not an argument which weathers well over time.

4. Subscribe to this bulletin

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More information about the sponsors of the bulletin, a library of relevant and useful documents, and an archive of past Bulletins, can be found on our web site. We appreciate your comments, your feedback (to j.sewell@on.aibn.com ), and items of interest that you wish to share with us and others who visit the web site.
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