GST cut gives provinces tax room to fix underfunding of cities

    OTTAWA, Jan. 15 /CNW Telbec/ - Municipalities should be given the
authority to levy the equivalent of up to one percentage point of sales tax as
part of a three-pronged approach to reducing the revenue shortfalls facing
Canadian cities, the Conference Board argues in a new publication. The recent
one-percentage-point reduction in the Goods and Services Tax has created room
for provincial governments to fix the fiscal imbalance of cities.
    "The pressure on cities to attract the skilled individuals and firms that
Canada needs has never been greater," said Anne Golden, President and CEO of
the Conference Board. "Yet, Canada's cities are struggling to cope with a
fiscal imbalance that threatens their ability to provide services, programs,
and infrastructure that will attract talent and investment. Failure to do so
would undermine not only their economies, but also Canada's future as a
    The ability to add up to one percentage point of the provincial sales tax
would support the principle of accountability that is lost when funds are
levied at one level of government and transferred to another. The tax would be
administered and collected by provincial governments as appropriate, but the
cities would set the municipal tax rate of up to one per cent. To avoid
administrative confusion, qualifying cities in a given province should agree
on a single tax rate.
    The other two prongs of a plan to provide cities with the fiscal capacity
they need are as follows:

    - Federal and provincial governments should upload funding for programs
      and services that they have offloaded to municipalities over the past
      15 years.
    - Municipalities must use the fiscal tools available to them to address
      their fiscal problems. These tools include: higher levels of borrowing
      to cover infrastructure costs; higher residential property taxes to pay
      for municipal services; user fees and tolls; and alternative delivery
      of services, such as bringing in the private sector for projects.

    The publication, Implement Sustainable Funding for Canada's Cities, is
the first of several briefings covering aspects of tax reform in Canada.

For further information:

For further information: Brent Dowdall, Media Relations, (613) 526-3090
ext. 448,

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