oreoda.blogg.se - Finances 101

Did you know: Property tax revenues don’t rise when property values go up.

Municipalities have to adjust property tax rates annually if they want the revenues to keep pace with costs triggered by inflation and economic growth. Income and sales tax revenues relied on by senior levels of government automatically increase with a growing economy, but property tax revenues don’t rise when property values go up. Canada has some of highest rates of property tax in the world, while most European and American cities rely much more on income and sales tax. Property taxes are regressive, as lower- and middle-income families spend a higher proportion of their income on property tax than higher-income families. The largest single source of municipal revenues is the property tax.

Did you know: Most municipalities around the world have reduced their reliance on property taxes and user fees.

Ultimately, Canada’s cities and towns would benefit from reducing their reliance on property taxes and user fees, and increasing access to more progressive revenue sources, as other municipalities around the world have done.

For example, all municipalities can levy basic property taxes, but not all can levy land transfer or other taxes. However, municipal borrowing capacity is limited by the provinces.Ī municipality’s ability to use a revenue tool depends on provincial rules, which vary from one province to the next. Municipalities can borrow money for capital costs, such as building a community center, which helps better distribute the cost among current and future residents in the community. Unlike other levels of government and most businesses, municipalities aren’t allowed to run deficits to cover operating expenses. Municipalities also raise smaller amounts of revenue from other sources, including permits, fines, and development charges. The largest sources of municipal revenue are property taxes, user fees, and transfers from other levels of government. Did you know: A tax or fee is considered “regressive” when lower-income earners pay a larger share of their income than those with higher incomes.

Municipalities need greater access to progressive revenue sources that shift costs onto those who can most afford to pay. Lower- and middle-income households pay a higher share of their income in these taxes and fees than those with high incomes.

However, many of the revenue tools that municipalities use to fund these vital services are considered regressive. In fact, by making services widely accessible to everyone, cities and towns play a critical role in building fair and sustainable communities. Municipal public services – including libraries, transit, water and sanitation services, and community centers – help ensure everyone can have a better quality of life, regardless of how much money they earn.