Instead of reducing spending and rolling back taxes in this year’s budget process in recognition of people’s fiscal reality, we saw municipal councils rush to join the the greedflation trend.
What if local councils could be stripped of taxation power? Or property taxes eliminated altogether? Replaced by an increase in, say, provincial sales taxes?
Dropping property taxes in favour of the sales tax is one idea being bandied about in Idaho, where property tax reform is high on the agenda just now. Of course, Americans are much more open to tax reforms, often to the extreme. This debate is worthwhile, nonetheless.
State Representative Jason Monks has been leading the charge, arguing rising property taxes are making it more difficult for people to stay in their homes or to enter the housing market. Increasing the state-wide sales tax to 11 per cent from six would be one way to offset the loss in municipal tax revenues.
The Idaho House of Representatives is now debating House Bill 292, which would facilitate some US$205 million and $355 million in property tax reductions in its first year, advocates say.
It’s a popular move, as a Boise State University study found some 56 per cent of Idahoans said their property taxes are too high. Gov. Brad Little called for property tax relief in his State of the State address at the start of this year’s legislative session.
“Property taxpayers have seen their property taxes go up significantly and they are demanding relief, and I think this bill, House Bill 292, is an attempt to respond to that,” Monks said during last week’s public hearing over the bill.
“We wanted to come up with a solution that would provide meaningful, immediate tax relief as well as long-term tax relief for our property taxpayers,” Monks told the House Local Government and Taxation Committee.
Such thinking is beyond the pale here, but should fuel a long-overdue discussion about reforming the regressive property tax system.
There’s nothing like tax season – income tax filing, first instalment of property taxes – to bring out your inner libertarian. It’s one of the many times we hate governments, but the timing also lends itself to thinking about why it is we pay taxes.
Libertarians would argue taxation is theft. From a certain perspective, it is. You either pay your taxes or risk having your property and your liberty stolen from you by the state. That’s true whether you don’t believe in the state or if you simply object to how some of your money is used (you may see the constant waste, entitlement and poor decision-making, for instance).
Where politics are involved, there are plenty of reasons to be upset about paying taxes: governments of all stripes waste considerable amounts of our money. Incompetence, patronage, graft and outright theft still exist. From ORNGE and the gas plants to municipal hiring and the LRT, from robocalls to the endless stream of federal propaganda spending, there are no shortages of examples at all levels of government.
In looking at those kinds of expenditures, paying your taxes becomes hard to stomach. That the likes of one extravagant lunch flushes away more than your entire tax bill leads you to think the money would be better in your pocket than in theirs.
That said, the bulk of the tax money collected by governments goes into providing us with services. From water pipes and roads to health care and education, these are things we opt to pay for collectively. Of course, that doesn’t mean governments have to over-hire and overpay staff. Nor that the screws shouldn’t be turned on suppliers and contractors to lower prices, moves that would benefit those forced to pay the bills. (Sadly, the it’s-only-other-people’s-money philosophy reigns supreme.)
Each of us can find examples of programs and services we’d rather not fund, making it easy to gripe about wasted tax money. Truth is, we’re generally much better off for what our tax dollars buy us.
That’s not to say things can’t be improved. Plenty of our money is genuinely wasted and funnelled into the wrong pockets. And politicians must be disabused of the notion that taxpayers are a bottomless well. That’s especially true given the huge infrastructure deficit, the funding for which has been given short shrift … other than lip service.
Hundreds of billions will be needed to repair and replace crumbling water systems, bridges, electrical grids and a host of other hard services we take for granted. That means more of our tax dollars will have to be directed that way at a time when an aging population will be demanding ever-more health-care and related services. Tough decisions are coming, the kind we’ll have to keep in mind while reviewing both spending and tax policy. We’re going to need more, not less money. Some programs will have to go. New spending plans may have to be scrapped. And, most importantly, tax giveaways and the shifting of the tax burden to individuals, largely in the middle class, will have to stop.
There’s one big problem, however: we don’t trust politicians. We don’t trust them with our money. We don’t trust them to be ethical. We don’t trust them to do what’s right for us.
All of this is a reminder that officials, local and provincial, need to see the big picture. That proverbial one-and-only source of tax money is under attack on multiple fronts. Something’s got to give. For municipalities, that means reducing spending on other programs – and thus overall tax rates – to compensate. If Woolwich, for instance, needs more money to deal with infrastructure, it had better find a way to reduce property taxes by a commensurate amount. The same applies for water and wastewater fees, projected to grow at three, four or five times the rate of inflation for several years. Want more money? Find a way to chop that amount from general taxes.
The folks in Idaho might be on to something.