Is tax reform really a reform?

A letter in today’s CH was a reminder that Marilla Stephenson’s column of March 20th (headlined “Halifax taxpayers deserve action on property tax reform“) warranted some comment. First the letter:

When I hear a municipality talk of tax reform, I smell a “tax grab.” Funny, isn’t it, that only a day or so after the HRM tax report is released, we hear of the need to build a new bridge and convention centre? It is clear that the target for the additional funds HRM is going to need for those projects, and for the many other items that are rising rapidly in cost, is going to be the middle wage-earning homeowner.

Why doesn’t HRM look at setting up a poll tax? That way, every wage earner pays for all the services that they use in HRM. This is much fairer.

By the way, like most homeowners who moved into HRM, I paid the exorbitantly high deed transfer tax for just buying a property here. I understand that it raises about $32 million per year. Is it the intention of HRM to make me contribute every year once the tax has been dropped to make up the missing amount? This is unfair. I paid the amount when I moved in. Why should I now continue to pay?

Russell Barton, Dartmouth

Mr. Barton is absolutely right about the tax grab part but is he right that a poll tax would be the solution? Wolfville, for one, would love a poll tax. Then its increased density strategy would pull in more tax revenue with no more outlay in services. Can you imagine though, keeping track of students?
Marilla talks about possible tax reform in her article:

The most significant shift in the report is the call to have property taxes linked to the cost of providing the service, with a series of flat rates per property. A single property would be charged for immediate services it receives, such as fire hydrants, local charges for services such as local transit and recreation facilities, and regional charges for items like the regional road network.

This is not quite a poll tax as it still only applies to property owners . A poll tax would apply also to renters, however the landlord presumably passes on at least some of his tax costs to his tenants.

Marilla goes on to highlight another proposed change.

Compulsory charges from the province for items such as mandatory education funding would be determined based on the property assessment system that is now in place and identified separately on bills as a provincial tax.

The question is, from a taxpayer’s point of view, would these changes if implemented, be an improvement over the present system?

The change that would identify fixed charges such as education funding is to be wished for. Making clear in the tax statement what costs the municipality has control over and what it does not can only improve transparency. As it is now the Town talks about provincial charges as being a big burden justifying their need for more money but who sees what the amounts actually are?

Regarding the other proposed change -Would flat rate taxes for itemised services lead to more accountability and would it lead to lower taxes in the long run? We would wish this was the case, it sounds plausible, but we fear not.

Marilla, unlike many taxpayers, does understand the game the municipalities are playing.

The shift away from assessment would surely provide the Halifax region with a tax model that would allow it to get out from beneath the freeze on assessments put in place by the provincial government, which has the effect of forcing council to articulate tax increases more clearly by acknowledging hikes in the tax rates.

Under the assessment model, without the freeze, council has repeatedly swallowed huge revenue increases under the guise of minimal rate hikes, because increased assessments meant, in many cases, much higher tax bills.[emph. ours]

You can put almost any municipality’s name in to replace HRM although some are worse than others and in our view Wolfville leads the pack. Will this game change if they are allowed to basically switch to a user pay system? We are afraid, unfortunately, that it will amount to another tax grab as our letter writer who smelled a rat suspects. Marilla has the same worry we do.

It’s also worth asking just how the flat rates for municipal services would be determined and what checks would be put in place to keep costs under control. Past practices of annual budgets that include municipal “inflation” figures to justify higher expenses but lack corresponding indicators of cost-cutting efforts won’t go far enough to satisfy the folks paying the bills on an ongoing basis.

Yes, good questions. Who will determine what the rate for each of the services should be, who would monitor the Town to ensure the rates were fairly applied or the services frugally administered, how could the individual taxpayer know if he was paying more or less than his neighbour for the same services, and would administration costs pile up when taxpayers complained when they didn’t have a sidewalk, or have their road ploughed, or that he didn’t use a service he was paying for? The town would not care then about maintaining property values (it already doesn’t it seems given its desire to eliminate R1 and to infill through flag lots- can it see what is coming?)

The only problem with the present system is the greed and laziness of those running our municipalities and their unwillingness to cut costs and be open about their budgets, which are useless documents from an audit point of view. It is hard to run a Town frugally and still provide good service; it is so much simpler and pleasant to have a fist full of dollars in your back pocket to make your job easier and to hand out to pet projects and people in favoured organizations around Town, all the while pretending to have the Town’s best interest at heart.

The best guarantee of honest and frugal government- no matter what tax system is in place- is to have honest and frugal people working for you, the taxpayer. It is an election year. Keep this in mind.

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2 responses to “Is tax reform really a reform?

  1. Ted Sutcliffe

    I’ve put a link to this post on a new site I’m trying to get going about Halifax.

    You can see it here: http://halifax.infomonkey.net

    The same link is on the City page in News.

    You can put links to your posts on the site yourself at any time.

    You can also post a link to your blog from infomonkey if you are interested in getting more traffic. Go to:

    http://halifax.infomonkey.net/other-local-blogs/

    Please let me know ASAP if you don’t want the link to appear.

  2. Sorry we didn’t see this before now… it was picked out by our spam filter