‘Unfunded’ wish list for city hall
Fair share of income, sales taxes could provide needed services
City council is now looking at a wish list of 35 “unfunded” items.
Many of them are in the “nice-to-have” not the “musthave” category. But numerous wish-list items relate to providing social services for senior, aboriginal and immigrant groups:
$900,000 to increase grants for community groups and seniors centres.
$289,000 for the Jerry Forbes Foundation to help build a centre for 15 to 20 non-profit volunteer organizations, such as Santas Anonymous.
$700,000 for programs for “at risk” populations: seniors, immigrants, aboriginals.
$1.5 million to help build 60 residential units/studios in the inner-city for artists.
$300,000 to identify and work with community leaders who can help in crime reduction.
Social services and immigration have been areas of responsibility for the provincial and federal governments, so even if city council is inclined to say yes to these funding requests, there’s the issue of where the city draws the line. This is a particularly pressing issue given that out of every tax dollar Canadians pay, the cities get about eight cents, with the feds and provinces getting the rest.
So, what should city politicians do?
They could simply say no to all these groups, especially the ones that should be funded by other orders of government, such as immigration services.
“You can always say no, and that’s what we said in the past, and that’s why we had no immigrants coming here,” says Mayor Stephen Mandel. “We were one of the worst in Canada. We didn’t have any facilities here.
“We hadn’t built a rec centre or facilities in co-operation with others for years. So you can always say no, but at the end of the day, what are you left with? A city that doesn’t meet the needs of its community.”
It’s worth noting that helping out immigrants and at-risk populations can save dollars in the long run by helping to get people on the right track, says Coun. Karen Leibovici.
“I guess we could say no, but the consequences of saying no to providing some of those services is sometimes seen in increased crime or people being disenfranchised from partaking in activities.”
The problem faced by cities is that property taxes — their main source of revenue — weren’t designed to pay for all social services, says senior policy analyst Casey Vander Ploeg of the Canada West Foundation.
“The property tax is a good tax for the municipalities to use to provide services to property … When the municipality puts in roads and sidewalks and other services to property (including policing and firefighting), it increases the value of the property, and the city captures part of that value back in increased property tax. So there is a logical economic link there.
“However, when municipalities start providing services to people, whether that is social services or affordable housing … then doing that through the property tax, that makes less sense. There is no link there.”
No society is able to pay for major social programs through property tax, says University of Toronto professor Enid Slack, an expert on municipal financing.
No country raises more than 10 per cent of total tax revenues from property tax.
The answer here is for cities to share in other forms of taxation.
Mandel would like more operational grants for needed programs. He’d also like to see the province give cities a share of license plate and hotel taxes, and also put in a tax on rental cars.
Slack advocates for cities to get a share of sales or income tax.
My own take is that a fair share of income and sales tax — but not a tax increase — is the best bet when it comes to giving municipalities what they need: long-term, substantial and sustainable funding.
In the United States, many cities levy sales taxes. In Europe, many cities levy income tax. It’s time for Canadian cities to get their piece of that pie.
I’ll leave the last word to Slack, who wrote in a recent study on big-city funding: “A strong case can be made for a local income tax to supplement property taxes for large metropolitan areas … A metropolitan income tax can be justified because governments in large metropolitan areas are increasingly being called upon to address issues of poverty, crime, land-use planning, regional transportation, and other region-wide needs.”