Saturday, January 05, 2008

Cap property taxes

Federal and many provincial politicians have successfully lowered taxes and balanced their books. But taxpayers are losing many of these gains because some municipalities are raising taxes at alarming rates. The problem is the creation of spending wish lists before the consideration of available revenues.

The local budgeting process is backwards. Instead of looking first at revenue then making spending decisions, they decide how much they want to spend first to determine how much tax revenue has to be collected to cover it.

Budgeting in the real world is about limitations. No one creates a household budget with new vehicles, vacations and maid service and then determines what salary their employer must pay them each year to make it all work. Taxpaying households have a limited budget to work with each year, and so should municipal governments.

A property tax cap would give local politicians the tools to say ‘no’ to incessant demands to increase spending with every proposal that crosses their desks. It turns local budgeting right-side-up by putting taxpayers in control rather than spend-happy local councils.

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