Cities need bigger share of tax revenue to compete

The Aug. 29 Postmedia editorial, Infrastructure a mess, but tax hike not the fix, shows a disappointingly narrow and old-fashioned point of view.

To call municipalities “glorified condo corporations” reflects a deep lack of understanding of the critical role cities and towns play in the daily lives of Canadians. The impact on the economic, cultural, social and environmental pillars of our society by municipalities is extraordinary.

There is a strong argument to be made that, for most people and most businesses most of the time, local government is the most important order of government. It affects the lives and daily business and social routines of people in the most direct of ways. Local governments have the closest and deepest attachment to their constituents of any of the six orders of government in Canada.

The call by the Association of Municipalities of Ontario (AMO) to raise the provincial sales tax by one percentage point with the proceeds going to local infrastructure is reasonable and progressive. Saskatchewan has been doing that since 2011, and a couple of years ago, Manitoba also moved forward, although that province scooped a significant percentage of the increased revenue.

The public generally underestimates the depth of the infrastructure deficit in this country. Too often it is considered to be only horizontal, the pipes and pavement that form the spine of any municipality. That is the old definition.

I define the infrastructure deficit to include technology (any progressive city needs reliable electricity, the fastest broadband), creative (everything from libraries to the parks that contribute to the quality of life that families, entrepreneurs, investors and millennials want), the capital investments municipalities, universities, colleges, schools and health care must make to ensure progressive and liveable local communities, and the investments federal, provincial and territorial governments must make in things like border crossings, the Trans-Canada Highway, harbours and other areas under their jurisdiction that directly impact municipal prosperity.

Infrastructure is the platform for how municipalities improve the lives of their citizens. It is the glue that holds together the economic, social and culture structures that fortify and animate a more civilized community.

We are talking about investing hundreds of billions of dollars during the next couple of decades. If Canadian cities are to compete effectively with cities in Asia, India, China, Africa and other regions that have been investing in high-speed rail, new communications technology, research and development, and other priorities that are making them global leaders, Canada needs to acknowledge our problem and develop better solutions.

It is inconceivable that municipalities can pay for infrastructure investments solely on revenue from local property taxes.

We need to be talking about municipalities getting a share of consumption taxes, which include income tax, carbon taxes, marijuana tax, gas tax revenue and sales tax.

Canada’s governments have been hiding from the harsh reality of the infrastructure mess for years.

Our towns and cities get only eight cents of the tax dollar Canadians pay every year. That is one of the lowest amounts for any of our competitors in western democracies. It is insufficient for our civic governments today to make the investments their communities need.

Canada’s towns and cities can not flourish in this competitive 21st century with a tax system from the 17th century and a governance system from the 19th century.

The AMO proposal is a worthy starting point for this important discussion that Canadians need to have about investing in infrastructure and developing a smarter, fairer way to share tax revenues.