Citizens have high expectations of their local elected officials. We want excellent services, we want great living spaces, we want high-quality infrastructure.
But it seems abundantly clear that municipalities no longer have the means to meet the growing needs of their populations. How can we implement ambitious measures to develop a healthy and dynamic living environment if the Legault government refuses to review municipal taxation?
The President of the Executive Committee of the City of Montreal, Dominique Ollivier, has been trying in recent days to convince us that it is a good idea to limit the increase in municipal taxes to inflation, i.e. to 5.2% in the last fiscal year . new. This still very significant increase comes with a $100 million budget consolidation plan.
In the business world, the city’s business model appears to be no longer viable. For the municipalities, whose responsibility is becoming ever greater, it is obviously no longer enough to raise taxes in line with the inflation rate, even to more than 5%.
We can freeze hiring, replace non-retiring employees or vacancies, we can even reduce the salaries of municipal officials. But the reality we face is less comprehensive and less efficient local public services.
Property tax, a problem
For Maxime Pedneaud-Jobin it is clear that property tax is no longer a solution but a problem. The former mayor of Gatineau lays bare this difficulty in a book published this week by XYZ called “Liberate the Cities.”
Property taxes no longer bring in enough money, says the man who now regularly comments on the Zone Information show on ICI RDI Monday through Friday at 3:55 p.m. Eastern Time.
In fact, the financial pressure on municipalities continues to increase. First, according to Statistics Canada data presented by Maxime Pedneaud-Jobin in his book, the municipal share of infrastructure financing was 30% in 1961. In 2005 it was 58%. During this time, the provincial share rose from 49% to 33% and the federal share increased from 21% to 9%.
However, drinking water leaks are common in communities, often requiring emergency measures and major investments in maintenance work. The “Portrait of Water Infrastructure in Quebec Municipalities” prepared by the Center for Expertise and Research in Urban Infrastructure shows that there is a deficit of almost $34 billion in the maintenance of municipal water management facilities.
Maxime Pedneaud-Jobin goes there with a cry from the heart: We lack the money to take on both our old and our new tasks, we lack the money to renovate our infrastructure, we lack the money to transfer it to the to adapt to climate change, and we lack money to build new ones. Property tax is no longer enough. We are in a fiscal impasse.
On average, 70% of municipal revenue comes from property taxes. Therefore, the only way to improve a municipality’s finances is to increase the number of real estate projects in its territory. Property taxes are the main reason for urban sprawl in Quebec, according to Gatineau’s former mayor. Property tax is harmful to the environment.
It is also unfair and regressive. A single mother pays the same property tax on her semi-detached house as her neighbors, a couple with two incomes. An older person whose income no longer increases pays the same amount of taxes as his or her neighbor who is still working. According to the Federation of Canadian Municipalities, the poorest quintile (20%) of Canadian families paid 9.62% of their gross income in property taxes in 2003, while the richest quintile paid 1.95%.
Interview with Maxime Pedneaud-Jobin, former mayor of Gatineau and panelist at Zone Info
We expect much more from the municipalities
According to Maxime Pedneaud-Jobin, the residents of a city or village are no longer just taxpayers who pay to use a public service. The municipality no longer offers specific services but regulates part of its common future, just like the Quebec government or the federal government.
The responsibility of cities has multiplied, he says, mentioning in particular the areas of the environment, culture, immigration and coexistence.
That’s why we have to get out of the captivity of property taxes, said the ex-politician, and give local authorities real power. Maxime Pedneaud-Jobin makes several suggestions that could increase the financial performance of municipalities:
Direct more tax revenue to municipalities. “Municipalities are responsible for 58% of public infrastructure and receive only 8% of the taxes paid by taxpayers”;
Require a development fee across Quebec to allow municipalities to expand their infrastructure through real estate projects and population growth;
Focus on the eco-tax and introduce new rates on additional garbage bags, water consumption for commercial purposes, “kilometers traveled by cars on the territory,” etc.;
Now require religious institutions to pay property taxes, a gift valued at $162 million per year, according to 2019 data;
Really transfer 1 or 2 QST points to municipalities, while the Quebec government has only granted municipalities an “annual amount equal to the revenue growth generated by one QST point.” This formula was expected to provide local governments with $70 million in 2021 and $730 million over five years. Maxime Pedneaud-Jobin says a full percentage point revenue transfer would have brought in $1.64 billion for the 2017-2018 fiscal year alone.
We must say goodbye to the paternalism of the Quebec government, concludes Maxime Pedneaud-Jobin. The former mayor believes that by abolishing school boards and school taxes, the state missed a great opportunity to promote local development. He believes the government could have transferred these taxing powers to local governments in addition to overall school infrastructure and school transportation.
Quebec, like other Canadian provinces, is among the countries in the world where the powers and financial responsibilities of municipalities are the most limited, adds Mr. Pedneaud-Jobin. The legal framework must change and municipalities must be given new powers and new financial resources.