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Ontario's Municipal Tax Madness Spreads

Author: Kevin Gaudet 2007/11/13
"As she began loyal, thus she remains."

The English translation of Ontario's official motto is grounded in the migration of those United Empire Loyalists from the United States. They remained loyal to Britain while the US fought for independence and against punitive British taxes. Sadly, our municipal politicians today are remaining loyal to Ontario's history of high taxes.

Mayors, with the notable exception of Ottawa mayor Larry O'Brien, are lining up both to raise taxes and to beg the federal government to give them more cash. Instead of these new attacks on taxpayers, mayors should get their own fiscal houses in order and refocus on a principled campaign, such as a provincial Gas Tax Accountability Act, which would inject another $1.8 billion into municipal budgets for transit capital.

For starters, the federal government is already transferring huge amounts of cash to cities and the province. When Stephen Harper took office, only 17% of federal fuel tax revenues were transferred to municipalities. By 2009-2010 that will be up to 52%. The question in Ontario should be when will Mr. McGuinty point the arrow in the same direction, as he only reinvests 47%. Manitoba and Saskatchewan have implemented Gas Tax Accountability Acts that require 100% of gas tax revenues go into roads and infrastructure. Increasing the transfer in Ontario to 100% would provide another $1.8 billion for cities to use on roads, bridges, highways and transit. This would erase alleged "deficits" of Mississauga, Toronto, and most municipalities.

Instead of better managing their own budgets or seeking a sensible stake of provincial fuel tax revenue, Ontario mayors are hiking taxes. First, Toronto mayor David Miller took the tax-hiking lead when he fought for and was given by Premier McGuinty new taxing powers. He has quickly put them to use, so far having imposed three new taxes - a garbage tax, a vehicle registration tax, and a new land transfer tax. These three taxes are equivalent to an 18% property tax hike in Toronto. These are on top of a 3.8% property tax hike last year with a likely hike of 4-6% in the next budget.

This tax-hiking madness is not only limited to Toronto. Mississauga mayor Hazel McCallion is proposing a property tax hike of 3.8% topped off with a 5% 'infrastructure surtax'. Now the torch is passing to other Ontario mayors as they prepare their assaults on taxpayers. Brampton is considering a property tax hike of around 5% with an infrastructure levy; and in Ottawa a feud is unfolding between a mayor who is fighting not to raise taxes and a council who wants to.

It is fair for municipalities to demand a share of provincial fuel tax revenues; after all, 80% of roads in the province are municipal roads. But municipalities need to get their own fiscal houses in order too. If politicians spent a fraction of the time looking for savings and efficiencies as they do new revenue sources, we'd all be better off. The city of Winnipeg in neighbouring Manitoba is doing it; and so can we in Ontario.

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Federal Director at
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