Tuesday, November 14, 2006

Miller, McGuinty and the Municipal Fiscal Imbalance

David Miller was reelected yesterday and in his acceptance speech he reiterated his plan to go after the other levels of government for a share of the sales tax.

I do support the notion of municipalities having access to more mature forms of taxation. If we are ever going to be able to have municipalities in control of their own destiny, they will need sources of revenue that grow with the economy. Property tax is a weak form of tax and not suitable for serious demands... especially demands of the sort downloaded by Mike Harris and retained by Dalton McGuinty.

However, the early response to Miller's plan makes me laugh. In the Toronto Star:

Premier Dalton McGuinty says he'll stand with Toronto as it seeks a portion of federal tax revenue, but the city shouldn't expect to get any provincial tax money.

"I'd love to be in a position to be able to dole out additional revenues to our municipal partners, but I'm not," McGuinty told reporters yesterday when asked about Mayor David Miller's election night vow.

Within minutes of his landslide victory last night, Miller said he'd fight Queen's Park and Ottawa to get Toronto the money it needs to succeed.

The mayor wants 1 per cent of either the provincial sales tax or federal GST generated in Toronto, which is worth about $450 million a year.

"What we can do is stand shoulder-to-shoulder- not just our municipal partners but the business community and the social sector as well - as we approach the federal government and continue to make our case," McGuinty said.

Well, if Dalton McGuinty feels that way, the solution is simple.

The federal government has already relinquished 1% of sales tax room and has plans to vacate another 1%. If Ontario had a harmonized sales tax, it could easily keep that 1% in place and have it directed to the municipality in which it was collected.

Easy to imagine, but it's not going to happen easily, any more than Quebec easily solved their fiscal imbalance by doing the same thing when Harper's first GST cut came around. This is an issue where you really can't believe what the politicians say, especially when those politicians are provincial premiers.


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