The Canadian Taxpayers Federation’s Maureen Bader is inciting a tax revolt for municipal taxpayers. If she gets her way, maybe we can be just like California.
Last Friday the Globe and Mail published an article in their business section outlining how Los Angeles area apartment owners in the mid 1970s financed a campaign against municipal taxes. That was the infamous Proposition 13 which rolled back and capped residential and commercial property taxes. It required local voters to approve all municipal tax increases.
Since that time the State of California took over the funding of schools from property taxation. Like many other states California is also barred by legislation from running an operating deficit.
The net result? California is looking at a $19 billion funding shortfall this year and a $37 billion shortfall next year. California’s schools were once considered the best in the country but are now dead last in student/teacher ratios. The State may have to seek a bail out from the federal government.
You can read the article here.
California was once a dynamic leader in the United States famous for its education system. Now it has become the Greece of the American states. Maybe those Los Angeles Landlords, and Maureen Bader, should be careful what they wish for.
WendiG // Jun 22, 2010 at 4:57 pm
I can personally vouch for the quality of the Calif. school system before the tax revolt..I grew up there..now my sister’s daughter went entirely through high school and is functionally illiterate, despite heavy participation by my sister in homework, etc. Teachers are underpaid and underappreciated, and teach in increasingly more crowded classrooms..read the LA Times for June 22 on this very issue..
A tax revolt in the strictest sense only cuts off the money necessary to maintain social programs and infastructure..but the HST is not the answer..a real dilema until you read the fine print..guess all those transfer payments we should have received from the Feds had to be spent on the Fake Lake..
Iglika Ivanova // Jun 22, 2010 at 10:45 am
Keith is right – it’s almost always cheaper to pool money and collectively pay for services (such as road repair, transit, schools) than to have people pay individually.
I think one of the biggest myths that the anti-tax campaigners like Maureen Bader perpetuate is that if you didn’t have to pay for a particular service out of your taxes, then you’ll be able to pocket the money and use them to go on vacation or enjoy other luxuries. This is almost never the case. If you had lower taxes, you’d have to use the money to pay privately for the same services (and at a higher rate) so you’ll actually have less left over for discretionary spending.
Think of schools, for example. If you didn’t pay for a public system through taxes, you’d have to pay for your kids to go to a private school – which costs a lot more. Same is true for things like health care – in the US less of your taxes go towards collectively paying for health care but private expenditures on health are much higher than what they are in Canada.
So, in the end of the day, most people are not going to realize any savings from lower taxes because they’ll have to fill in the gaps by private spending.
Keith Reynolds // Jun 22, 2010 at 9:59 am
Bader had an op-ed in the Vancouver Sun Monday. See http://www.vancouversun.com/news/tool+help+citizens+fight+City+Hall/3180222/story.html
Payroll spending is the largest part of any organization delivering services. Wage increases tend to follow the cost of living.
Is local spending excessive? I guess it depends on how much we value local services. The services delivered by municipalities are consistently highly valued by citizens (most municipalities poll on this). And just as consistently it is cheaper to provide these services collectively than it is for people to buy them individually.
One of the things that often happens when taxes are frozen is that infrastructure maintenance gets deferred often leading to higher costs in the future.
In terms of pension commitments, public employees pay a high proportion of the compensation for their future pensions which is why these pension plans in Canada are not in trouble. Neither is the Canada Pension Plan.
One more thing. KPMG’s Competitiveness Report (http://www.competitivealternatives.com/highlights/cities.aspx) shows the City of Vancouver to be one of the most competitive places in North America to do business.
For the services we get, we are not overtaxed.
Kevin Brown // Jun 22, 2010 at 7:51 am
We could also be like Greece, bankrupt with too much debt, and a huge union payroll /pension commitments. Have a look sometime at the cost of Payroll in the Municipal budget, and how much it has increased over the last few years. What Maureen wants for taxpayers is some form of protection from Municipal Govt OVERTAXATION, and to hold them accountable. They need to control their costs. We do, why should they not. Increasing taxes to make us for excessive spending has got to stop
spartikus // Jun 22, 2010 at 9:49 am
Strangely Canada is not Greece – a country whose defence spending is completely out of whack to it’s actual defence needs, a country which recently hosted a Summer Olympics that in retrospect it obviously couldn’t afford, and a country which, and this is key, has by joining the Eurozone lost the ability to devalue its crisis – a step which would have allowed it to largely avoid this crisis.
Yes, Canada is not Greece. Canada is the country whom KPMG recently rated as the having the lowest business tax costs in the industrialized world.
What’s more fortunate than Canada not being Greece is that Canada is not California. California is a place that has “controlled costs”. It’s controlled them so well it’s about to join the third world.
spartikus // Jun 22, 2010 at 9:50 am
That should read “devalue it’s currency”
Robert Smits // Jun 22, 2010 at 12:12 pm
We already have protection from over taxation by our municipal governments, they’re called elections. If you don’t like your taxation level, vote for someone else.
What we really lack is protection from senior governments, federal and provincial, downloading their costs to municipalities.
And from right wing ideologues trying to foster their crazy anti any taxation schemes.
spartikus // Jun 21, 2010 at 10:18 pm
Is this in reference to a specific Maureen Bader article or initiative?