Eight cent myth debunked

Municipalities get more than stated from tax dollars collected in Canada

  • Feb. 26, 2014 9:00 a.m.

The Canadian Federation of Independent Business (CFIB) has released a new report that shows municipal governments are consistently misrepresenting how much tax money ends up in their coffers.

While the Federation of Canadian Municipalities (FCM) claims that cities receive just eight cents out of every tax dollar collected in Canada, the actual number is nearly double that: 15 cents. The FCM leaves out major sources of revenue, including transfers from provincial and federal governments, from its calculations.

“This eight cent myth is used at every municipal meeting to support the story that municipalities are revenue starved,” said Laura Jones, CFIB executive vice-president. “But it’s a story that doesn’t reflect reality.”

According to the report’s findings, while transfer payments from senior levels of government did decrease in the 1990s, overall municipal revenue increased thereafter as municipal taxes and fees more than made up the difference.

Currently transfers from senior levels of government are at an all-time high and inflation-adjusted revenues for Canadian municipalities doubled in the 31 years leading up to 2012.

“Municipalities do not have a revenue problem,” said Jones. “They have a spending problem. It’s one thing to ask for more money if it’s needed and another to spend like it’s going out of style, and then cry poor.”

Real operating spending (accounting for inflation) by Canadian municipalities grew by 55 per cent from 2000 to 2011, while the population grew by only 12 per cent.

CFIB recognizes that some are doing better than others, but calls on all Canadian municipalities to make it a priority to bring spending in line with inflation and population growth.  One way to achieve this goal is to work towards aligning public sector wages with private sector norms. To view the full report, visit www.cfib.ca.

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