Tax support needed
Replacing crumbling infrastructure will need more funding than smaller cities and town in Ontario can afford.
Ontario Premier Kathleen Wynne may have rejected a proposal to raise the provincial sales tax to pay for infrastructure projects, but if a new source of revenue is not found, cities and towns won’t be able to repair roads or sewers, says Welland regional councillor Paul Grenier.
“The consequence of the status quo is that municipalities will start having to decide how long they let things go because they can’t afford to repair or replace them,” said Grenier in a Tuesday telephone interview from the Association of Municipalities of Ontario in Ottawa. “They will have to accept, for example, slower response times from emergency services because (on bad roads) they won’t be able to get to calls as fast.”
Grenier, a member of the AMO board, said municipalities have nearly reached the limits of how much money can be raised through property taxes, but infrastructure costs continue to climb.
There is a $4.9 billion difference between the ability of Ontario municipalities to raise money and the costs of critical infrastructure upkeep, ranging from buying ambulances to repairing roads, he said.
That is why the AMO board floated a proposal this week asking the provincial government to raise the HST by one per cent and the money be allocated only for infrastructure.
Wynne, however, flatly rejected the proposal Tuesday.
“That’s not something that I’ll consider,” Wynne told The Canadian Press in an interview before she was to address the AMO conference. “We’re right now trying to help people get ahead ... People are having a hard time making ends meet, so this is not something that we would consider.”
Wynne touted the government’s previously announced plan to spend $190 billion on infrastructure over the next 13 years, noting that the federal government has also promised billions of dollars to address the province’s aging systems.
The AMO did not acknowledge those plans in announcing its tax proposal but said it expects municipalities across the province will struggle with infrastructure funding over the next decade.
“We’ve done our homework, and it’s clear that property taxes can’t keep up with growing local needs,” AMO president and deputy mayor of Innisfil, Ont., Lynn Dollin said in a statement. “Municipalities have been funded the same way for decades. Obviously, times have changed and if we want to build communities for the future, municipal governments need a greater local share of tax dollars.”
The AMO said raising the provincial sales tax by one per cent would generate an additional $2.5 billion in revenue. Without that money, property taxes could double over the next decade.
Grenier said the sales tax proposal would result in around $25 million in infrastructure funding coming to Niagara.
Wynne said she suspected some provincial funding, plus funding promised by the federal government, would go some way to addressing the needs of cities. She also said she’s open to having future discussions with the AMO or its members to discuss funding options other than provincial sales taxation.
“There was going to be a robust discussion about that over the past year, and that hasn’t happened,” she said. “What I will be talking to the president about is, ‘what happened to that initial conversation? Let’s talk about what’s going on in your communities. What are the people in your communities willing to take on in terms of further investment tools for municipalities.”’
Grenier said he believed most Ontario citizens accept the importance of maintaining critical infrastructure and that “it costs money.”
However, while Grenier said the sales tax proposal is “a sound policy decision,” it is not an easy sell.
“It is very difficult to go into an election year talking about raising taxes on consumption. I don’t think any party is going to do that.”
However, Grenier said he was pleased Wynne left the door open to find another solution.
He said in the past, proposals to find new ways to fund infrastructure resulted in negotiations that saw Queen’s Park upload some costs, easing the tax burden on municipalities.