Halifax – No one likes paying taxes, but like death, they’re a certainty. What we can do, however, is try to ensure that our taxation system is fair to all taxpayers and promotes economic growth. Recommendations for improvements to the tax structure in Halifax Regional Municipality (HRM) are made in Spend & Tax: Improving efficiency and accountability of taxation in HRM by Harry Kitchen, Professor Emeritus in the Department of Economics at Trent University in Peterborough, Ontario.
Published by the Atlantic Institute for Market Studies (AIMS), Spend & Tax analyzes a number of tax options and recommends several changes to the way in which HRM raises revenue. Kitchen recommends that HRM be permitted to implement several new types of taxes; however, allowing the city to diversify its taxing tools should not be misconstrued as a call for higher taxes overall.
While having efficient and effective taxes will be important contributors to HRM’s economic health, so too will having overall tax burdens that are low and competitive.
The paper adopts a model that promotes allocative efficiency, accountability, transparency, and fairness. With the aim of providing the best possible economic advice, political constraints, such as the need for provincial approval of some recommendations, are not addressed.
With regard to the existing property tax regime, Dr. Kitchen recommends that:
1. the property tax base should be market value with all properties assessed in a uniform and frequent manner;
2. assessed property values should not be frozen or capped and preferential assessment of some properties should be avoided;
3. variable tax rates should be used to capture differences in costs of servicing different properties (by neighbourhood or property type); and
4. the practice of over taxing commercial/industrial properties should be reversed.
In terms of alternative revenue sources – the use of which would allow for a decrease in property taxes – he recommends that:
1. user fees should be expanded to include more services, especially solid waste collection and disposal;
2. the range of services for which infrastructure charges can be applied could be expanded to include arterial road construction and expansion, recreation complexes and facilities, libraries, emergency measures facilities and vehicles (police, fire, and ambulance);
3. HRM should be given access to the personal income tax by ‘piggybacking’ onto the provincial tax with the tax rate set by the HRM council;
4. HRM should be permitted to implement a dedicated municipal fuel tax to fund a portion of public transit and transportation projects with the tax rate determined by the HRM council; and
5. HRM should be given access to tax incremental financing instruments.
“HRM has wisely undertaken a broad-based review of its taxation policies. An optimal tax structure is a critical ingredient for cities that wish to grow and prosper in a highly competitive, globalized economy,” explains Kitchen.
“This is not about increasing the amount of tax we pay,” says AIMS acting President Charles Cirtwill. “It’s about ensuring the taxpayer knows who is taking her money and what she is getting for it. Once she knows that, then it will be far easier to judge if she is being overtaxed, and vote accordingly come election time.”
To read the complete paper, click here.
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For further information, contact:
Dr. Harry Kitchen
705-745-7203
Charles Cirtwill, AIMS acting President
902-489-7699
Ian Munro, AIMS Director of Research
902-429-1143