The City of Edmonton just released its 2007 budget. Currently, Edmonton ratepayers are facing a 7.8 per cent tax hike, but that could reach 9.3 per cent if the various interest groups and city funded agencies are successful in their pitch for more dough. The City of Calgary approved a three-year budget last year which included a 4 per cent tax hike for 2007. Unfortunately, Calgary's mayor now warns that number will grow. With other Alberta municipalities facing sky-high property tax hikes as well, it's clearly time for a property Tax Cap.

Market-value assessed property taxes are an unfair, regressive and punitive method of collecting tax revenues. The current assessment scheme is particularly demanding on those with fixed incomes (eg. persons with disabilities, pensioners, etc.).

Your property tax bill is divided into two individual taxes: the municipal levy and the education levy. While technically these two taxes are separate, they are assessed and sent to the homeowners in one bill. On average, the municipal portion makes up 62 per cent of the total bill and the provincial education portion makes up the remaining 38 per cent.

Since 1994, the province has reduced its take of property taxes by 36 per cent (from 51 per cent of the total bill down to 38 per cent). However, most homeowners have not seen these savings on their tax bill. This is thanks to municipalities steadily taking more in municipal taxes (49 per cent of the total bill up to 62 per cent).

In essence, the province has cut property taxes virtually every year since 1994 but Albertans never receive the savings because most municipalities raise local property taxes at exactly the same time.

This continues to be a sweet deal for most municipalities. They get to increase taxes without paying the political price. The bottom line stays the same (or increases) for most homeowners, but it's a bonanza for municipalities.

In fact, municipalities like this shell game so much that the Alberta Urban Municipalities Association, the Alberta Association of Municipal Districts and Counties and of course the mayors of Edmonton and Calgary are urging the province to get out of the property tax game altogether.

That could be a good idea if it protected taxpayers instead of protecting big government local politicians.

The solution The Canadian Taxpayers Federation proposes that a property Tax Cap be implemented on a province-wide basis, restricting municipalities from increasing property taxes by more than the rate of inflation, unless they got permission from voters in a referendum to raise them higher.

This would mean significantly lower taxes in Edmonton this year, as Edmonton's yearly inflation rate has averaged only 3.1 per cent over the past twelve months. Most Edmontonians would have a significantly easier time swallowing a 3.1 per cent tax hike over the proposed 7.8 per cent hike they're currently looking at.

Similarly, the yearly inflation rate for Calgary has only averaged 4.0 per cent over the past twelve months. As Calgarians were already told a year ago their 2007 tax hike was going to be 4 per cent, they would probably welcome a 4 per cent hike over what the Mayor has already warned is going to be higher.

Many of the PC leadership candidates are starting to embrace the idea of cutting education property taxes, but the gesture will ultimately be meaningless without a Tax Cap that ensures taxpayers - not local politicians - get to decide if it goes into municipal coffers or into their wallets.