A penny taxed is still a penny

It’s the classic call of all voters: we want more stuff, but we don’t want to pay for it. Last week Calgary Mayor Naheed Nenshi, on a visit in Toronto, mentioned the possibility of raising the Goods and Services Tax by one per cent for Calgarians. The money collected would go toward arts and culture projects such as new libraries and Glenbow Museum renovations, as well as recreation centres and parks. Nenshi is not formally proposing the tax, but by stating in his campaign platform last year that he would increase funding for the arts and recreation, he is at least trying to follow through with his promise. The tax is worth considering.

The response to Nenshi’s proposal, however, has been tepid. Some city councillors are complaining that raising taxes now is bad timing so soon after a recession. Similarly, opponents claim that a sales tax is a poor way of raising money for specific projects– the tax will be raised, some projects will be built, but the tax is unlikely to be lowered again.

The tax increase is only possible with the federal government’s permission. The Conservative government will have to endorse Nenshi’s plan, which after lowering the federal GST from seven to five per cent seems unlikely. When former Toronto mayor David Miller proposed a similar idea in 2007, the Conservative party turned it down. With enough municipal support, however, the Conservatives would be more likely to consider it.

For Nenshi, simply beginning a discussion is likely to improve the situation. Currently, the city’s primary source of income is property tax. Last year Nenshi proposed a cut to a planned tax raise, so the money he is looking for could have been redistributed from the tax increase last year, rather than proposing an increase to municipal GST. Of course, those taxes wouldn’t have been dedicated to specific projects, but it likely wouldn’t have caused as much trouble.

The goal of proposing this tax, according to Nenshi, is to encourage city councillors to start thinking about ways of generating revenue, rather than depend on provincial and federal proceeds. Projects like renovating the Glenbow Museum will take more than municipal funding, but showing an initiative will pressure the other levels of government into providing money. One issue is that Nenshi hasn’t provided a reason for using a GST increase rather than increasing property taxes.

Increasing taxes isn’t the solution for every problem. High taxes deter businesses from moving to the city and prevent City Hall from considering cost saving strategies– a valuable way of cutting inefficiencies.

A positive sign for supporters of the proposal is that some business leaders are interested in the penny tax. Transformation Calgary is a group of business leaders backing the approach, arguing that the revenue of the one per cent increase would bring ($250 million annually) is worth the small tax increase for each citizen. Of course, this is a claim that must be confirmed with the electorate before the tax should be instituted, but specific projects– and a fixed term for the tax– could be a way of convincing opponents.

It’s true that voters rank other concerns above arts and recreation. Traffic, crime, schools and public transit take priority for many Calgarians. Some projects do justify the tax. The Glenbow Museum is an important part of Calgary’s art scene. Libraries offer a cost-effective way to get books and access the Internet for those who can’t afford computers at home. The Epcor Centre is another integral part of Calgary. For communities in the suburbs, expansion has occurred faster than recreation centres have been built. Many residents in such communities will see the value of increasing the number of places to play hockey, go to the gym and swim. While such programs often play a role in reducing crime, voters who want to be tough on crime often prefer to increase police numbers.

For now, the proposal remains merely a proposal. But given the benefit the tax increase could bring to the city, it’s one that is worth considering. In the past, Calgarians have been reluctant to accept tax increases, but the demand for better services is going up. Citizens will soon have to decide if they want these services enough to pay for them.



. . Gauntlet Editorial Board

Leave a comment

Your email address will not be published.