Thursday, 2 June 2016

Time for the feds to cede fuel tax powers to cities

On Friday, prime minister Justin Trudeau meets with the Federation of Canadian Municipalities. A main topic for discussion is sure to be about where the first round of the $120 billion federal infrastructure grants will be spent over the next decade.

Canada's municipalities all have long lists of upgrades for existing roads and water lines, plus plans for a lot of new building that has languished on the books for a lot of years. All that's been missing is for either the provinces or the feds to turn on the taps for funding. That's because municipalities are restricted on how they can raise money to support the general health of the places where the vast majority of Canadians live.

Which may lead you to wonder — as it has occurred to most Canadian big-city mayors — why the other two levels of government are so loathe to give up their taxation powers and cede them to the cities where the people live, and where all their public services are located.

This week, a pair of federal watchdogs raised concerns that municipalities are not keeping up with their reporting duties to the federal government, telling them where their gas-tax refunds are going.

The federal Environment Commission works through the Auditor General's Office and its commissioner, Julie Gelfland, is complaining that Infrastructure Canada isn't getting its data on the state of city infrastructure spending in a timely way.

It's federal money, she says, so the feds need to know how it's being spent.

I say this shouldn't be federal money in the first place, and barring ensuring good accounting and the need to keep good statistics, it shouldn't be any of their business.

Currently, the federal government collects 10 cents on every litre of gasoline and four cents on every litre of diesel fuel we buy. Plus GST (or HST in provinces where that applies).

On the fuel tax alone, the take is about $5 billion a year. Of that, $2 billion a year goes to Canada's cities for infrastructure spending. As we all know, that's not nearly enough to keep our current streets, water and sewer lines and public transit in good repair across Canada, much less allow for growth.

In its first federal budget, the Trudeau government announced an ambitious spending program for municipalities of more than $120 billion over the next 10 years. But at least one province — Quebec — is complaining that bureaucratic delays have ensured that none of the money will be put into projects this year.

It's not just cities not getting their paperwork in order, it's the federal civil service dragging its heels, sending projects back to Square One with a variety of new conditions for cities to meet the needs of the program. At least from Quebec's perspective.

I say the feds should get out of the city-building business altogether.

Getting a program as big as this online in a year is pretty well impossible for a government. Especially a government facing deadlines to pass laws governing doctor-assisted deaths. Oh, and completely overhauling the electoral system in the meanwhile. Throw in Senate reform, if there's not enough else to do.

If we're going to lose a year getting the economic benefits of stimulus spending on much-needed city projects, far better to spend that year negotiating a transfer of taxation powers so that cities can plan their own futures with their own revenues.

If that power is to become (at least partially) fuel taxes, so be it. Anything's better than taxing the real estate value of our homes.

Right now, Vancouver, Victoria and Montreal have a city tax on fuel. In Vancouver, it's a whopping 11 cents a litre. No wonder the buses are so crowded. No wonder the routes are at five-minute intervals.

If we're afraid that allowing cities access to $5 billion more a year in tax revenue could lead to corruption, well, that fear has already been raised in the federal sphere with the rushed-forward stimulus spending plan. For their part, provincial governments have been no strangers to envelope-passing and bid-rigging on public contracts, either.

We'll need safeguards, and full reporting on spending could be part of that. If anything, the federal government is far better placed to be a watchdog than a sugar daddy. Especially if it's not their money the government is watching. Which it shouldn't be.

Canada isn't a small-town country anymore. We have cities with larger populations than some of our provinces. Mayors get more votes than premiers in some places.

So mayors — whose jurisdictions manage the delivery of all our tax-paid services — need the ability to do long-term planning, based on predictable budgets, not the largesse of federal election promises.

Time for the feds to give up the fuel tax, and cede that power to the cities where people pay them.


Follow Greg Neiman's blog at Readersadvocate.blogspot.ca

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