More Tax Sources for Canada’s Largest Cities: Why, What, and How?

Harry Kitchen and Enid Enid Slack
Additional contact information
Enid Enid Slack: University of Toronto

No 27, IMFG Papers from University of Toronto, Institute on Municipal Finance and Governance

Abstract: Canadian cities have long called for access to more tax revenues. This paper argues that additional taxes are appropriate for major cities, describes the advantages and disadvantages of potential new taxes, and estimates the revenue from a city income tax, a city sales tax, and a city fuel tax for eight Canadian cities – Vancouver, Calgary, Edmonton, Winnipeg, Toronto, Ottawa, Montréal, and Halifax. The authors find that the property tax is a good tax, but cities would benefit from a mix of taxes. In particular, user fees are an important source of revenue and can alter economic behaviour. Taxes on income, sales, vehicle registration, fuel, and hotel stays are also an effective way to diversify local taxes. Of the available options, a personal income tax and a municipal sales tax are likely to generate the largest revenues. Although setting up their own tax systems would grant cities the greatest fiscal autonomy, doing so would be costly. It would be more cost-effective for cities to piggyback new taxes onto provincial taxes, with the province collecting the revenue and remitting it to cities. To promote local accountability, however, it is essential that local governments set their own tax rates. In this way, taxes levied would be linked to services consumed.

Keywords: municipal finance; local taxes; fiscal autonomy (search for similar items in EconPapers)
JEL-codes: H71 H77 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2016-10
New Economics Papers: this item is included in nep-pbe, nep-pub and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Published in hard copy and online

Downloads: (external link)
https://tspace.library.utoronto.ca/bitstream/1807/ ... ack_June_27_2016.pdf First version, 2016 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mfg:wpaper:27

Access Statistics for this paper

More papers in IMFG Papers from University of Toronto, Institute on Municipal Finance and Governance Contact information at EDIRC.
Bibliographic data for series maintained by Enid Slack ().