The Atlantic Institute for Market Studies released the paper Wednesday afternoon. Author Juanita Spencer proposed the new model of equalization should deliver financially strapped municipalities with more taxable revenue from local communities.
Morgan said he believes government should aid people most vulnerable in society, such as seniors and low-income earners.
He added that government services at all levels should be paid for using a progressive income tax system where the wealthy bear the greatest financial burden.
“I don’t have any problem with government, as an initial step, transferring wealth in an unrestricted manner to individuals,” Morgan said.
“It’s not a matter of municipal governments necessarily being the taxation model. There’s a basic principle that citizens ought to have comparable services at comparable tax rates.
“If the federal government equalizes in some reasonable manner revenue flow to individuals across the country, and the federal and provincial governments tax people and corporations appropriately based upon the income tax system, there’s enough revenue there to easily deliver government services of every nature in a fair manner across the country.”
Spencer suggested this reformed system of equalization would constrain the province’s dependence on federal subsidies.
“Overstretched provincial and federal budgets have created spending pressures for municipalities,” she said in an AIMS news release.
“With limited taxing capacity and no constitutional authority, municipalities today are struggling. The impact of our declining population will only increase the pressure.”
Spencer said providing money directly to people opens the door to additional local revenue, while at the same time ensuring services are being delivered that meet the specific needs of communities.
A local political scientist argued that if municipalities were given the authority to impose income taxes to provide services that the province would no longer be able to afford to offer, the result would be “highly inequitable.”
“We would be starting from a very disadvantaged position — relatively few wealthy residents, no major head offices, and so on,” said Tom Urbaniak, a political science professor at Cape Breton University.
“To sustain itself, the region needs first-rate transportation infrastructure, strong international connections, comprehensive post-secondary institutions, vibrant downtowns, good schools and health care, and, yes, a transitional affirmative action policy including public investment in business incubation to encourage more homegrown entrepreneurs.
“Eliminating equalization to the provinces won’t deliver these things, even if some of our residents get compensatory cheques in the mail.”
The current equalization agreement between the federal government and provinces is set to expire in 2014.