ward3brighton.ca

An article in yesterday’s Guardian, in which I figured, made reference to the “34-cent issue.” This has been a bone of contention between the City of Charlottetown and the provincial government for many years, but it is not well understood by the public and attempts at succinct explanations are not always successful. For example, the article states:

…the province, which collects property taxes for the city, takes $1.50 per resident and gives back $1.16, keeping the other 34 cents. In other words, the province charges a fee for providing the service…

The first sentence is sort of correct, almost, but the second confuses two issues. The City does, in fact, pay a fee to the province for administering the collection of municipal property taxes. Last year, that fee was approximately $417,000. This is not a tax. It is just an administration fee to collect the tax, and is separate from the 34-cent issue (The fee itself is another bone of contention, because when the federal government stopped charging GST to municipalities, the province promptly clawed back the savings the City realized by imposing the admin fee, but I digress.)

Another blurb caught my attention in the Guardian article. I may be nitpicking here, but I think it should be clarified. The article states:

the ‘34-cent issue’, as it’s been dubbed, has cost city taxpayers $5 million.

Again, technically correct, but I would add to the end of the sentence the words “last year alone.” The amount has grown with assessments, but this has cost City taxpayers millions of dollars, each year, since the scheme was hatched.

If you’ve made it this far, you might be asking, “Yeah, we pay taxes. So what? Tell me something I don’t know.” Well, for starters, there is no other full-service municipality in Canada where the provincial government keeps a portion of property taxes. Property taxes are generally supposed to be used to deliver services to… properties. In Charlottetown, it is the municipal government that delivers all the services, such as snow plowing, water & sewer, police & fire services, street paving, sidewalk construction, etc.

So, in Charlottetown you pay a residential rate of $1.67 per $100 of assessed value, but only $1.33 goes to the city. The other 34-cents goes directly into the province’s general revenues to be spent in any way — and any place — the government sees fit, whether it’s plowing the roads in Souris or subsidizing the beef plant in Albany. That is, the City delivers services using only 80% of the taxes paid by its residents. The other 20% is a tax on Charlottetown; a disincentive to live here; a cash cow for the province; a transfer payment to the rest of the province. It is unfair.

City taxpayers are already struggling to pay their taxes. Charlottetown, like every municipality, is struggling to provide essential services, build and repair infrastructure, and manage ballooning costs using revenue that is mainly derived from property tax. But with the baseline set at 34-cents — the starting point at which you actually start to receive something in return for your taxes — it is impossible to generate sufficient revenue without creating an unreasonable burden on City taxpayers. The tax rate in Charlottetown has actually dropped in recent years, but the City — like most municipalities — has relied on increases in assessments to balance its budget. If the province would simply eliminate the 34-cent “Charlottetown Tax”, and treat us the same way every provincial government treats its full-service municipalities, the residential tax rate would immediately drop from $1.67 to $1.33. The City of Charlottetown could then begin to slowly increase the rate as required, with proper budget debate and justification, so that we could deliver a level of service that is proportionate with the price residents are paying for it.