by Steve Hammond
I would like to add a few comments to Jim Bertram’s July 26 article, “Tax Rise Anyone?”.
1) Has anyone noticed that property taxes are paid out of your after tax income? So, if your property tax is $4,000/year, you had to first make somewhere between $6,000-$8,000 in pre-tax income (depending on your personal income tax rate). When you think of it this way, property taxes have turned into a whopper of an expense for the average homeowner.
In the USA – which has its own issues of excessive taxation – property taxes can be deducted from your personal income taxes through itemized deductions on your Federal 1040 and State return. Oh, and by the way, your mortgage interest is also deductible from personal income taxes.
2) MPAC assessments have nothing to do with the ability of the taxpayer to pay their taxes from what they earn in yearly income. In fact, MPAC assessments seem to track increases in money supply in the economy, rather than any increase in GDP or net wealth. There is no advantage to our economy to have house prices going up, when the value of the money is going down. GDP is rising by about 1-2% a year, while money supply is going up by 10-15% (see Bank of Canada website). Since 2008, money supply has roughly doubled. Does anyone remember the 1920’s Weimar Republic inflation? Or, more recently, Zimbabwe’s? Totally unsustainable.
3) Who decided that property value was the way to determine the tax rate on your home or business? Our various levels of government are always talking about delivering services to people. Shouldn’t municipal taxes be levied on a more direct fee-for-service framework, based on simple residency and/or actual services received?
4) There are two fiscal elephants hiding in the municipal budget. One is the gap between development fees and infrastructure costs associated with urban development (I don’t have the numbers, but it’s a lot. At the 2017 budget public meeting, I heard a number around $1.5million). The other is the huge carrying costs of the Municipal Centre (roughly $2million net/year). I would love to know the exact figures, and why these numbers are so large. I would be happy to be corrected on this. Hopefully, the corrected numbers are lower.
5) Why make improvements, or invest in your property, when your reward is more taxation? This is an incentive in reverse. Does this make any sense? Do we want everyone living in a tent?
6) If the Provincial and Federal governments want to download all the responsibilities of government onto the municipalities, why do we pay all those income taxes and HST?
Conclusion: The sad fact is that all levels of government have squandered much of our personal and collective wealth, while creating a mountain of debt. Federal and provincial governments know they can’t increase their total tax take by increasing income taxes and HST. So what’s left? Increase taxes on the only major asset held by the citizenry – their home.
Whether you like it or not, we’re all auditioning for the role of feudal serf (we’ve had lots of practice already!). On the bright side, we won’t have to waste time watching “Game of Thrones”. We’ll be living it.
1) Make property tax deductible from income taxes. This will get the attention of Ottawa and Toronto, because, in a few years, property taxes will take all your income anyway, at the rate they’re increasing, leaving nothing for the province or the Feds. OK, I’m exaggerating a bit. Maybe. This would be fair and deal, with some of the issues of Federal and Provincial downloading of regulation and services to municipalities.
2) Make it a law that property tax increases cannot exceed GDP growth. This would at least allow personal income to approximately keep pace. Tell your Federal Government that you’re tired of the con game of absurd low interest rates and massive increases in money supply that are masking the failure of our system to create real economic growth.
3) Re-design government so it acts like a fiscally responsible household. There are a couple of TV shows on Sunday morning on Global that are hosted by Gail Vaz-Oxlade. One of them is called “Money Moron.” You get the idea. We need someone like Gail to talk some fiscal sense into our governments. Or better yet, we could create a “taxpayers fiscal oversight committee.”
4) Challenge your Municipal council and staff to write about municipal fiscal issues (details please) in the local paper. Thank you, Councillor Jim Bertram, for your frequent articles. Let’s get informed and critical about where the system is going wrong so we can make the necessary changes. Let’s make sure urban development fees pay for the urban infrastructure.
5) Stop voting for celebrity politicians who use pomp and circumstance, and smiley-face pictures in newspapers and magazines to get your support. Vote for people with detailed solutions to our fiscal predicament.
Last words: Government should not be a growth industry. It hasn’t worked out very well when half your income goes to the government and they still can’t balance their budgets. Demand that your government implement policies that bring about lower taxes and sustainable prosperity.