Quote:
Originally Posted by Shazam
There is nothing particular about the situation that is unique to property tax.
Do the same thing, except stick Alberta as the center piece and the rest of the pieces as the other provinces.
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Being primarily income and sales tax based, Ontario is the centrepiece. Alberta punches way above it's weight, but a third of the population is a big thing to overcome.
Income and especially sales taxes being more efficient don't have the same big fluctuations as property values can, and typically rise and population and the economy does. Calgary is still growing as a city but it won't see that correlate to increased tax revenue. Even if their income is well below the Alberta average, many of those new residents will contribute to income tax and sales tax to the federal government, but won't do anything to the city's revenue despite being people that will affect service goals, infrastructure requirements, etc. Not to mention that changes to income tax and property tax affect people in significantly different ways. Nobody likes their income tax rate increasing, but it's still tied to what you actually make. My tax rate could double, but I'm still being taxed to what I bring in, it can't exceed my income/revenue which a major property tax swing could do. It's the difference between seeing your income tax rate increase 20% from 10% to 12%, and having people assess your income 20% higher, taxing you as a $120K earner instead of a $100K earner (when you might only be earning $80K).
The federal government being able to borrow also means you can cushion these major swings a lot better to spread the effects/reaction out over many years, rather than bringing the uncertainty of major tax burden shifts on an annual basis. Being able to combat uncertainty is one of the things a government should be doing to ensure economic growth. Tough to do that when your main source of tax revenue is so volatile and reactive, and you can't do anything to mitigate it to level out the severity of that volatility.
I get people are wary of city's having more tax power and definitely wary of borrowing to run a deficit, but the reality is that being able to shift away from property tax as the primary revenue source would be in the best interest of everyone.