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Practical ways to lower our property tax burden

Author: John Carpay 2004/10/14
Property taxes have more than doubled in the past 40 years, and that's after taking inflation into account.

According to "Straight Talk," a recent study by the Canada West Foundation, Canadians paid a total of $1.5 billion in property taxes in 1961. In 2000, Canadians paid $33.3 billion in property taxes. A large jump should not be surprising, when you consider both Canada's population growth and inflation from 1961 to 2000. But has our property tax burden grown in real terms, after taking Canada's inflation and population growth into account Yes, unfortunately. In 2000, Canadians' property tax burden averaged $1,082 for every man, woman and child. But in 1961 the property tax burden was $482 per person, in year-2000 constant dollars and adjusted for population.

Some municipal politicians whine about insufficient revenues, and suggest cities should get more taxing powers. But first they should explain why it costs more than twice as much to deliver municipal services today than it did in 1961.

Rather than looking for ways to extract even more tax revenues from citizens, our municipal politicians should focus on reducing costs and increasing accountability.

Services like water, sewage and garbage collection should be paid for by user fees rather than out of property taxes. Why should the property taxes collected from one home with only two residents have to subsidize another home, in which six residents use three times as much in services but pay the same amount of property tax User fees create more transparency and accountability than property taxes, which disappear into general revenues. But new user fees should never be imposed unless property taxes are cut by an equal amount.

Cities should spend 100% of their budgets on core services which are not delivered by the provincial and federal governments: policing, firefighting, roads, snow removal, garbage collection, a sewage system, and the like. There is no reason why government should be in the business of funding arts and entertainment. Doing so takes choice away from citizens as to which forms of art and entertainment they wish to pay for themselves with their own hard-earned money. It takes choice away from citizens and hands it over to politicians and bureaucrats.

Another way to find annual savings is for local governments to harness the dynamism of the private sector in delivering services. Opting to privatize local government owned businesses is one quick rout to reducing the size and liabilities of local government. Alternative Service Delivery (ASD) and Public Private Partnerships (3Ps) can be used to replace current government owned services and agencies.

Taxation on a particular property should not be allowed to rise any faster than the rate of inflation, as a maximum. If city council wants a larger increase, it should have to ask taxpayers for permission in a referendum. And taxpayers should have the right to place tax reduction proposals on the ballot for consideration by their fellow citizens.

Last but not least, the federal government should start sharing some - if not all - of its 10-cents-per-litre fuel tax revenues with municipalities to pay for infrastructure. Recent announcements of a multi-billion federal surplus, which is over-taxation, again reveal that Ottawa can easily afford to do this.

Those elected on October 18 can choose to lower property taxes by limiting municipal spending to core local services, paying for more services through user fees rather than property taxes, and more privatization. Where there is a will, there's a way.




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Franco Terrazzano
Federal Director at
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