[Calgarian]

A local business man is proposing a local 1% increase to pay for infrastructure. He claims it would add $350 million a year to the budget.

http://www.cbc.ca/news/canada/calgary/story/2011/09/27/calgary-penny-tax.html

I think it's an interesting idea, and would consider supporting it, but I would rather see a provincial policy on allowing cities to keep more tax revenue like Nenshi is proposing.

What do you think?

[Radley77]

A local business man is proposing a local 1% increase to pay for infrastructure. He claims it would add $350 million a year to the budget.

http://www.cbc.ca/news/canada/calgary/story/2011/09/27/calgary-penny-tax.html

I think it's an interesting idea, and would consider supporting it, but I would rather see a provincial policy on allowing cities to keep more tax revenue like Nenshi is proposing.

What do you think?

I wouldn't drive out to Cross Iron Mills just to save 1%, but I'd be curious relatively how much business might want to locate just outside of city boundaries. I could see this being a problem particularly for big ticket items like autos, where there is the potential to save 100's of dollars. I think Calgary has proven itself to be a good steward of public funds towards public infrastructure and for that reason would be supportive of some incremental spending directed at public projects. I don't know if a penny tax would still be effective in generating new revenue source if big-ticket items were exempt.

[Koolfire]

Would there be a rebate on new homes? If not then that would push more people out to Airdire, Chestermere, and so forth. This could end up being a catch 22.

[freeweed]

Go ask Americans how well their municipally-levied taxes have worked. You might want to look up "unintended consequences" just in case you're not familiar with the term.

I don't think it's the worst idea in the world, but why not just increase property taxes accordingly?

[Boris2k7]

^ The problem with relying on property taxes alone is that eventually nobody can afford to live anywhere.

[Me&You]

^ The problem with relying on property taxes alone is that eventually nobody can afford to live anywhere.

But in the meantime, Calgary's property taxes are very affordable.

Perhaps a tax increase on properties over a certain value... 2% wouldn't be noticed by many in the $500k and up homes. This of course assumes the city could actually keep this part of the property taxes.

[freeweed]

^ The problem with relying on property taxes alone is that eventually nobody can afford to live anywhere.

... I'm not sure why property taxes would be the killer here. This same sentence could be equally applied to income tax (nobody can afford to work anywhere) or sales tax (nobody can afford to buy anything).

I don't mind the idea of a progressive property tax as mentioned. I might set the threshold slightly higher than $500k though - that's pretty much an "average" house these days in Calgary. :haha:

[suburb]

But in the meantime, Calgary's property taxes are very affordable.

Perhaps a tax increase on properties over a certain value... 2% wouldn't be noticed by many in the $500k and up homes. This of course assumes the city could actually keep this part of the property taxes.

I don't see marginal taxes on one's home being a fair deal. There are already many seniors with older homes that are now very valuable due to land. The nature of a percentage tax is that it is more for high value property already.

Marginal taxes on income, on the other hand, are alright in my books, as clearly it is gravy after a certain income level. Perhaps it can be considered provincially. 10% remains till $100K, 11% from $100K-$200K, 12% from 200K and up. From the entire pot, give 0.5% or so to the cities and towns proportional to population.

Frankly speaking, I wish the Feds would have not decreased the GST and instead transferred one percent to cities and kept 6% themselves. It would have been better federally and for cities. It was a real opportunity missed. The entire debt and deficit picture that we've been enduring federally would have been completely different, had the politically motivated move not been made.

[fusili]

2 things:

- the tax needs to be implemented regionally (Cochrane, Okotoks etc)
- large items (cars etc) need to be exempt to avoid the situation of people travelling to Red Deer or the like to buy these items. Driving to Red Deer to buy a car to avoid the 1% tax makes sense, doing so to buy a toaster doesn't.

Other than that, I think it could work. As long as it is a plebiscite and has a term limit and a defined outcome (a certain infrastructure project), I could support it. That way it is accountable and measureable.

[Calgarian]

Frankly speaking, I wish the Feds would have not decreased the GST and instead transferred one percent to cities and kept 6% themselves. It would have been better federally and for cities. It was a real opportunity missed. The entire debt and deficit picture that we've been enduring federally would have been completely different, had the politically motivated move not been made.

I agree, it was nothing more than pandering to the voters.

[bigcanuck]

On a related note, Jack Mintz (Director of the School of Public Policy at the University of Calgary) yesterday indicated that a Provincial sales tax would actually be beneficial to Alberta.


Link - via 660 News (http://www.660news.com/news/local/article/282109--sales-tax-would-boost-so-called-alberta-advantage)

[Calgarian]

On a related note, Jack Mintz (Director of the School of Public Policy at the University of Calgary) yesterday indicated that a Provincial sales tax would actually be beneficial to Alberta.


Link - via 660 News (http://www.660news.com/news/local/article/282109--sales-tax-would-boost-so-called-alberta-advantage)

That would go over about as well as HST did in BC. Not saying I disagree with it, just saying.

[LFRENCH]

That would go over about as well as HST did in BC. Not saying I disagree with it, just saying.

I happen to fully agree with mintz on this. I know everyone is shocked that I still file my taxes in BC, but simply because its a lower tax burden.

before you all start in, when I moved here I barely noticed a difference in savings of not having the PST. Many goods I have bought were higher than the BC price plus GST/PST.

one example was I went to get some new bedding at a national chain, BC price was $32.99+12% and the AB price was $49.99+5%. this item was not on sale and there was only a day between me being in both stores. The BC item was $15.54 cheaper, which is a huge margin difference.

Now I'm not saying this always happens but it has happened more than, I would have been lead to believe.

[freeweed]

That price would still be higher in AB even with PST. The cost difference has nothing to do with taxes, and everything to do with the sheer amount of excess disposable income in this province.

[suburb]

That would go over about as well as HST did in BC. Not saying I disagree with it, just saying.

Wasn't there some talk at one point at a 1% gasoline tax going to cities? This would make sense from the perspective that the people who drive more correlate to higher costs to the cities (EG roads). The other optics benefit would be that it would be a hidden tax. Personally I don't care much if it is hidden or not, but optics are critical to having things not result in public revolt.

Personally, I do agree that a provincial sales tax is warranted, but like you said, that wouldn't go over very well (unfortunately).

As an aside, were they to do something provincially, I would hope that they step back and consider the big picture, IE incorporating not only a portion for municipalities, but also finding enough revenue to invest back into the Alberta Heritage Foundation for Medical Research and related provincial endowments (incl. the Heritage Fund overall). The province really needs to think longer term!

[DizzyEdge]

I'm wary. A business man suggesting Calgarians pay more taxes to pay for unfunded projects (and create more business), in an article where it seems like a suggestion that the rich members of the city are tired of putting money up for projects will be lucky to only have 75% of the city against it.

Now, if the capital project portion of the city's budget was eliminated, and property taxes reduced accordingly, maybe then I could get behind it.

Here's a question, do businesses pay GST?

[lubicon]

Wasn't there some talk at one point at a 1% gasoline tax going to cities? This would make sense from the perspective that the people who drive more correlate to higher costs to the cities (EG roads). The other optics benefit would be that it would be a hidden tax. Personally I don't care much if it is hidden or not, but optics are critical to having things not result in public revolt.


Calgary and Edmonton currently currently receive 1 cent/litre from the provincial gas tax.

I'm wary. A business man suggesting Calgarians pay more taxes to pay for unfunded projects (and create more business), in an article where it seems like a suggestion that the rich members of the city are tired of putting money up for projects will be lucky to only have 75% of the city against it.

Now, if the capital project portion of the city's budget was eliminated, and property taxes reduced accordingly, maybe then I could get behind it.

Here's a question, do businesses pay GST?

I believe businesses both charge GST on the service they provide and pay GST on their purchases. But I think they credit what they pay against what they collect and only forward the difference to Ottawa.

[suburb]

Calgary and Edmonton currently currently receive 1 cent/litre from the provincial gas tax.

Okay - so that than is something that could easily be increased to 2 cents or what have you. The mechanism / process is already in place, and per the previous note, the distribution of tax burden is semi-fair with this method.

[LFRENCH]

That price would still be higher in AB even with PST. The cost difference has nothing to do with taxes, and everything to do with the sheer amount of excess disposable income in this province.

my point is that despite not having a PST, crap is just marked up higher by the retailers thus feeling like we do have one. I'd rather pay our provincial government through PST than pad the bottom line of some of these corporations.

You did manage to contradict the typical babel that I hear from many about how BC costs more because of taxes. First night I was in Alberta, some moron asked me what its like to live in a "socialist state" :koko: Apparently he believes that PST is a socialist ploy..

[DizzyEdge]

Calgary and Edmonton currently currently receive 1 cent/litre from the provincial gas tax.



I believe businesses both charge GST on the service they provide and pay GST on their purchases. But I think they credit what they pay against what they collect and only forward the difference to Ottawa.

So in essence, the chamber of commerce came up with a plan to fund capitol projects via a tax the businesses don't actually pay :)

[Doug]

Go ask Americans how well their municipally-levied taxes have worked. You might want to look up "unintended consequences" just in case you're not familiar with the term.

I don't think it's the worst idea in the world, but why not just increase property taxes accordingly?

I live it every day. Municipalities down here bend over backwards to attract retail (ex. property tax subsidies, infrastructure subsidies, expropriating private land to resell to retail developers at a loss) to get in on the sales tax gravy. The corollary is that they often go to extraordinary measures to not zone for new residential as it does not yield sales taxes. This is a very bad idea.

[Doug]

On a related note, Jack Mintz (Director of the School of Public Policy at the University of Calgary) yesterday indicated that a Provincial sales tax would actually be beneficial to Alberta.


Link - via 660 News (http://www.660news.com/news/local/article/282109--sales-tax-would-boost-so-called-alberta-advantage)

I don't think he is advocating a sales tax to fund incremental spending.

[Doug]

User fees are the lowest risk method of generating additional revenue:
-higher public transit fees, especially if they could be targeted at downtown commuters
-increased parking rates
-vehicle registration surcharge
-road tolls, especially if they could be variable (charge more during periods of congestion)
-surcharges for non-Calgary residents who use City of Calgary services

[Calgarian]

I'm surprised no one is talking about Nenshi's proposed method of letting the city keep more of the tax money it collects, from what I understand this is superior to increasing property tax or GST as it just re-distributes the tax money already collected in a more equitable way. That being said, dipping into the revenue the Province collects would likely mean more taxes to supplement the amount they miss out on.

Or am I out to lunch on that proposal?

[freeweed]

my point is that despite not having a PST, crap is just marked up higher by the retailers thus feeling like we do have one. I'd rather pay our provincial government through PST than pad the bottom line of some of these corporations.

Sure - but the fact is you'd be doing both in Alberta, PST or no PST. Prices aren't very elastic here due to the ridiculous amount of retail spending that goes on. Introduce a PST and you'd be padding the bottom line of both government and corporations.

You did manage to contradict the typical babel that I hear from many about how BC costs more because of taxes. First night I was in Alberta, some moron asked me what its like to live in a "socialist state" :koko: Apparently he believes that PST is a socialist ploy..

:haha: Every place in Canada is highly socialist already. Hell, that applies to most if not all of the western world.

Alberta is definitely more expensive on a lot of things - but incomes more than compensate so it feels "cheaper". It depends on exactly how you're looking at it. Working here but shopping elsewhere is pure heaven, you get the best of both worlds.

[freeweed]

I live it every day. Municipalities down here bend over backwards to attract retail (ex. property tax subsidies, infrastructure subsidies, expropriating private land to resell to retail developers at a loss) to get in on the sales tax gravy. The corollary is that they often go to extraordinary measures to not zone for new residential as it does not yield sales taxes. This is a very bad idea.

This is reminding me of the case a few years back where some city or another expropriated dozens of homes and bulldozed them, against the wishes of the community - so that Wal-Mart could build a huge store.

[You Need A Thneed]

So in essence, the chamber of commerce came up with a plan to fund capitol projects via a tax the businesses don't actually pay :)

No, businesses pay the same GST as anyone else. However, only the end user pays the GST, or else we'd be compounding 5% each time a product changes hands before getting to the end user (which would be a lot of money).

Companies pay GST on things that they are the end user of, just like anyone else.

[MichaelS]

:haha: Every place in Canada is highly socialist already. Hell, that applies to most if not all of the western world.


Hence austerity measures...

[freeweed]

Hence austerity measures...

Austerity isn't a necessary result from socialism. Hell, what corporations have been doing for the past 4 years easily qualifies as "austerity measures" - but we just call it "cost control" or "cutbacks".

[MalcolmTucker]

Okay - so that than is something that could easily be increased to 2 cents or what have you. The mechanism / process is already in place, and per the previous note, the distribution of tax burden is semi-fair with this method.
The city gets 5 cents a litre from the province, and around half that from the feds (but the gas tax formula isn't based on sales for the feds).

As long as the extra taxes are approved in a referenda I don't have a problem with them. Otherwise, the province will politically own the tax by giving the power away.

If the people own the tax, it might stay around long enough to actually accomplish stuff, unlike the car registration levy in Toronto for example.

[bigcanuck]

The city gets 5 cents a litre from the province, and around half that from the feds (but the gas tax formula isn't based on sales for the feds).

Correct - Link - from July 2010 (http://www.energy.alberta.ca/Oil/pdfs/FactSheet_Gasoline.pdf)

[Cage]

No, businesses pay the same GST as anyone else. However, only the end user pays the GST, or else we'd be compounding 5% each time a product changes hands before getting to the end user (which would be a lot of money).

Companies pay GST on things that they are the end user of, just like anyone else.

Generally speaking companies do NOT pay GST/HST (they do however pay PST in all provinces that have this tax).

Example company has cost of $40 for parts and sells the assembled widget for $100. The cash outlay is $42 ($2GST, $40 for the part) and the cash in-the till is $105 ($100 for the product and $5 GST). To further complicate things, Company A buys office supplies for a GST component of $1. At the end of the month Company A remits $2 as GST payable to Receiver General for Canada ($5 sold to the consumer less $3 GST they paid to their suppliers). In effect Company A does not pay GST.

Company's that supply zero rated goods or services (e.g. most Grocery items) will always get a refund of their GST paid. Again these companies do not pay GST.

There is a third group of company's that supply GST exempt services. Orthodontists and Dentists are in this group. They do pay GST because they cannot claim an input tax credit for the GST that they pay.

[tenth]

No, businesses pay the same GST as anyone else. However, only the end user pays the GST, or else we'd be compounding 5% each time a product changes hands before getting to the end user (which would be a lot of money).

Companies pay GST on things that they are the end user of, just like anyone else.
That's not the case. Generally speaking, businesses can claim an input tax credit for virtually everything on their GST return (subject to some pretty specific exceptions).

As an example, office supplies. At the end of the day when office supplies are consumed by a business, the CRA will have netted 0% GST from the point of producing the product to the point they end up in the garbage.

[Calgarian]

Nenshi called out Mar forn his comments about Municipal Taxes and transit funding. I wonder if this relationship will be like Bronconnier vs. Stelmach, I hope not.
http://www.cbc.ca/news/canada/calgary/story/2011/09/29/calgary-taxes-mar-nenshi.html

[MalcolmTucker]

Mar flip flopped and said cities should be allowed to implement new areas of taxation like a gas tax add on if approved by their citizens.

Sales tax since you need the feds and province onside I would think would be much harder to do.

[1ajs]

1% increase hmm why not province wide and the money from that 1%increase stays withing that municipality or city it was genirated in...

[Cage]

1% increase hmm why not province wide and the money from that 1%increase stays withing that municipality or city it was generated in...

Its near impossible to track or develop the legislative rules to determine the point of origin for goods or services to within a municipality.

Consider the following of an Oilfield Services company.
- Head office and all invoicing/cash management is done in Calgary.
- Outside Salesperson lives in Grande Prairie.
- Goods are shipped from a third party warehouse in Edmonton.
- The goods are for a job site in Ft MacMuyrray.

Which city gets the 1%? All the above cities will make a claim that they deserve the 1%. Should you allocate .25% to each city?