Infrastructure a mess, but tax hike not the fix
Ontario municipalities’ idea of raising provincial sales tax to help fix aging infrastructure got a quick thumbs down from provincial party leaders recently. That was no surprise. Raising a highly visible tax less than a year before an election, to benefit another level of government, adds up to three strikes for provincial leaders.
That doesn’t mean there isn’t a problem that requires a solution. Municipalities say they need an additional $4.9 billion a year to keep the public’s roads, bridges and arenas in good condition.
Property taxes generate only $20 billion in total, so that’s a big gap.
Raising provincial sales tax by one percentage point would close just over half that gap, generating $2.5 billion a year. It would be an easy solution for municipal politicians, but it’s never going to fly.
At their core, municipalities are glorified condo corporations that keep our roads, sewers and water pipes in good repair. That’s the most basic function a city has. Politicians aren’t going to get much sympathy when they say it can’t be done, especially since Ontario’s property taxes are the highest in the country.
The argument the Association of Municipalities of Ontario has mounted seems a little overwrought. Without provincial help, AMO predicts, property taxes will go up about eight per cent a year for the next decade, nearly half of that to pay for the infrastructure gap.
It’s a scary projection, but not one that will become reality. No politician who wants to get re-elected is going to propose an eight per cent property tax increase one year, much less every year.
Saying no to AMO’s sales tax proposal was right — but that doesn’t mean the province doesn’t have a role to play in making sure municipalities can do their job and still keep property taxes affordable.
Rather than imagine municipalities can find $4.9 billion in cuts to cover the repair bill, the public should be asking why things like social housing, long-term care and education are on our property tax bill. These are provincial responsibilities. The education property tax alone is $6 billion a year.
The province needs to narrow what property taxes cover, so that our cities and towns can do their main job.
The province needs to narrow what property taxes cover, so that our cities and towns can do their main job.”