Taxpayers Federation opposes gravel pit Special Operating Agency

Presentation

WINNIPEG: In a presentation to the City of Winnipeg Alternative Service Delivery Committee, the Canadian Taxpayers Federation strongly opposed the creation of a gravel pit Special Operating Agency (SOA) that uses taxpayer dollars to head into direct competition with the private sector.

The city's proposal to borrow $1.5 million for capital expenditures related to the gravel pit places Winnipeg taxpayers and tax reductions at unreasonable risk. The plan could cost taxpayers millions of dollars in lost revenues, and consequently property tax relief if other service delivery options are ignored.

The SOA would pay no corporate income tax and would rely on Winnipeg taxpayers to cushion potential losses.

"The city is digging itself into debt and burying hope for tax relief by embarking on this reckless business adventure," said Victor Vrsnik, CTF provincial director. "The city shouldn't wade into competition with the private sector to generate extra revenue. The city has a spending problem, not a revenue problem."

The creation of primary materials SOA could use predatory pricing to harm other private sector gravel pit operators. Direct competition and predatory pricing would adversely affect ma and pas operations and possible lead to unemployment and business closures.

"Surely the city's idea of being "open for business" does not include the notion of driving potential competitors in the private sector out of business," noted Vrsnik.

The CTF recommends that the city not proceed with approval of the gravel pit SOA. The city should consider other service delivery options to the Pine Ridge Gravel Pit that would not place Winnipeg taxpayers at risk, accumulate unnecessary debt and head into direct competition with a healthy private sector industry.