No to HST hike, but what are the answers?

Meet Kathleen Wynne, tax fighter.

Even the Ontario premier’s staunchest allies will agree that’s not a description that is often applied to Wynne. And yet, you can thank her for saying an abrupt ‘no’ to a request from the Association of Municipalities of Ontario (AMO) which would have seen the harmonized sales tax (HST) go up by 1 per cent in order to fund municipal infrastructure improvements such as roads, sewers and arenas.

No doubt this is not what Wynne had in mind when she told municipalities to work together on developing new sources of revenue to make a dent in municipal infrastructure gaps. Increasing the HST from 13 to 14 per cent is not among the options she is prepared to consider. Not with an election around the corner and polls showing The Liberals are inching back into contention with the conservative party.

A bad idea motivated by good reasons is still a bad idea. Increasing the HST is not something any of the major political parties are willing to consider. Especially not the Liberals who have been criticized for previous tax increases, and especially not with a hotly contested provincial election just around the corner.

But here’s the thing: While this idea was doomed from the start, the problem it was intended to address is all too real and getting more serious. Municipal officials have been warning for years that towns and cities cannot afford the growing cost of infrastructure maintenance and development. With increasing concern about liability, insurance costs are becoming prohibitive, leading to public facilities in some communities being shuttered. Roads, sewers and bridges across the province are in need of serious upgrades and repairs. Larger cities don’t have the money, but the problem is especially acute for smaller communities.

In most communities, the gap between need and available investment is growing incrementally every year. For many cities and towns it is hundreds of millions, provincially it’s pegged at $4.9 billion. How will municipalities keep up? They don’t have the myriad of revenue options the province has. But for most municipalities, the options are few: increasing user fees, reduce services or increase property taxes. None of those is a sustainable strategy.

The province recognizes all this, which is why Wynne has said she’s open to creative options. Having the province take over some local roads, for example. Taxing vehicle registration and land transfers is another. From a taxpayer’s perspective, new fees are never appealing. But neither is having your property taxes double over 10 years, which is what the AMO says will happen if this load isn’t shared with the province.

The province cannot download this burden. Municipalities need more options. Where are the solutions that are palatable to all involved?