Municipal advocacy group asking for support regarding HST increase

Municipality Matters

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The Association of the Municipalities of Ontario (AMO) is asking its members to support a one per cent HST increase to pay for the province’s crumbling infrastructure. The campaign, originally launched in August 2017, was the result of several months of internal debate within AMO, spurred on by Ontario Premier Kathleen Wynne, who encouraged municipal leaders to discuss what type of “revenue tools” they may need in the future to help support infrastructure costs.

“This is what we feel is the best option,” AMO President Lynn Dollin said in an interview with the Globe and Mail in August.

However, hours after the idea was made public at a convention in Ottawa, the provincial government rejected the proposal. “We will not be increasing the HST,” said Jessica Martin, a spokesperson for Ontario Finance Minister, Charles Sousa, in an email to the Globe and Mail.

She explained in the email that the province has committed to doubling its gas-tax transfers to municipalities in 2019. “With more money coming down the pipes each year, municipalities can better plan and invest to meet their local needs,” she said.
According to a survey done by the Ontario Liberal Government’s Ministry of Finance in 2015, most Ontarians said a tax increase would be unacceptable. However, a separate poll released by AMO in August, 2017, found that, while Ontarians would not support a tax increase to fund the Provincial Government, they would be OK with paying a bit more tax to support local infrastructure.

The AMO have stated that the one per cent tax increase would result in about $2.5 billion in new revenue, which would be distributed equitably to help every municipal government in Ontario fund their infrastructure and services with greater predictability. This would pay for roughly half of the $4.9 billion dollars AMO has estimated Ontario needs each year for the next ten years, to maintain current service levels and finance infrastructure needs.

AMO says the other option for funding infrastructure costs is raising property taxes, but they believe this is not a viable option. In order to close the $4.9 billion funding gap, municipalities would need an eight per cent revenue increase per year for ten years. This is unrealistic for many municipalities, as Ontarians already pay some of the highest property tax in Canada. Raising the property tax a more realistic amount of one per cent wouldn’t even come close to meeting the municipalities’ needs.

Merrickville-Wolford council were presented with a resolution to support what AMO is calling the “Local Share” at their council meeting on January 29. While it is clear that the Municipality will need help supporting infrastructure upgrades and repairs in the coming years, they were still hesitant to support it. “As a small Municipality, I would like to know the definition of ‘will be distributed equitably’,” councillor David Snowdon said at the meeting. “Traditionally, that hasn’t worked very well for Merrickville-Wolford.”

Mayor David Nash said that, while he believes that AMO’s suggested funding model will be more favourable than it has been in the past towards small municipalities, he agrees that the Provincial Government doesn’t have the best track record when it comes to distributing infrastructure funds equitably. “Ninety per cent of the infrastructure money that has been available this year has gone to public transit in Toronto, Hamilton and Ottawa,” he said.

According to AMO’s website, their funding model, which is based on the number of households in the municipality, would provide Merrickville-Wolford with $364,192 per year to go towards funding local infrastructure. North Grenville would receive $1,998,815.

Merrickville-Wolford council decided to put off voting on the resolution until they can complete further research about whether this rise in sales tax would be of benefit to the Municipality. A resolution to support the tax increase has not come to the North Grenville council chambers yet; however, they did receive information regarding a “Local Share” information session from the City of Brockville held last month.

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