The Small Guys Always Pay More

The Canadian Federation of Independent Business (CFIB) has been campaigning for the last few years to reduce taxes to businesses from local governments. Every year they come up with a report which skews the facts and spins them in order to provide an ‘unbiased’ view of how businesses are unfairly treated by municipalities and their ability to tax properties.

In addition, this year they were able to bend the ear of the new Premier who, as part of her platform, and I am sure in order to satisfy the business community, promised to create the office of the Municipal Auditor General in order to make municipalities more accountable.

There are a number of issues here: from taxes being too high, to accountability and transparency of local governments; from what the real priorities are, to what is the real agenda; and I can go on.

What saddens me is that, as usual, those who are suffering and are going to suffer are the taxpayers, of which I am one. But there is a limit to both the financial capacity and the patience of the taxpayers.

The reason I am not too pleased with CFIB and the current move about the Municipal Auditor General, is that at the end of the day, the rich will be richer and the poor will be poorer. This is in contrast with the declared platform by Premier Clark, and yet this will be the result.

FACTS:

  • Businesses do not pay only property taxes but a number of other taxes, mainly the annual income tax – and so all other taxpayers. Let’s say you pay $10,000 a year in taxes: $9,300 go to the Feds and the Province and only $700 go to your municipality.
  • If your municipal tax bill is $3,000, your municipality only gets $1,500 (half of it). The rest goes to other agencies, including the Province for schools (double dipping). In fact, the majority of the other $1,500 goes to the Province.
  • Of the $1,500 that go to the municipality, $300 go to Feds for policing, which now leaves the municipality with even less ($1,200).
  • Municipalities are mandated/legislated (forced – which is a good thing) to balance their budget. So your per-capita debt with your municipality is a whopping $0.
  • Federal and Provincial Governments carry a huge debt because they don’t have to balance their budget. Do you know what is your per-capita ‘exposure’ to that deficit? Well, just your share of the federal debt is $16,500.
  • In order to pay that debt back, both federal and provincial governments have continuously reduced funding for local government programs. We have water systems, sewer systems, roads and basic needs that need to be taken care of in the next twenty years as their life span is coming to an end. Where is the money coming from? Or should we just let everything fail and go back in time of a couple of centuries?
  • The Province continues to download programs to municipalities, but it keeps the money for itself. Now we have to take care of housing, social programs, some policing programs, and more. I am wondering where the provincial money is going.
  • Municipal books are open and independently audited. Anyone can see where the money is spent and how. We have internal and external controls and transparency is our word. Try to get that from a federal or provincial department.

LET’S SEE THE OTHER SIDE OF THE COIN:

Warren Buffet recently commented on the US economic situation and stated that the government has it all wrong. Taxes should be fairly applied across the board. He pays only 17% of his income in taxes compared to the 46% of a school teacher. He is baffled by the fact that rich corporations have to pay less, proportionally, than the average Jane Doe. This is happening in Canada too. Is this what CFIB is trying to achieve?

A recent editorial in the Vancouver Sun recommended that the “bankrupt public sector might look to the private sector for guidance” out of the latest crisis. First of all, municipalities are not bankrupt and cannot be, because of the law, thank goodness. Secondly, and I cite a reader from Burnaby “Is it (the editorial) referring to the same private sector that took hundreds of billions of dollars in bailouts from governments? Or the private sector rating agencies that gave subprime derivatives rock solid ratings before they were found to be worthless? Or could it be referring to how private sector increased executive salaries and bonuses after the bailouts saved them? Thanks, but I don’t think that the solution to getting out of the crisis lies in the private sector. They are the ones who got us into this mess in the first place.”

Listen to this: twenty-five of the 100 highest paid U.S. CEOs earned more last year than their companies paid in federal income tax, a pay study said Wednesday. It also found many of the companies spent more on lobbying than they did on taxes. In a letter to the US Oversight and Government Reform committee’s chairman, Representative Elijah Cummings asked “to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today.” He also asked “why CEO pay and corporate profits are skyrocketing while worker pay stagnates and unemployment remains unacceptably high,” and “the extent to which our tax code may be encouraging these growing disparities.”

Is this what CFIB is aiming to achieve?

THE MUNICIPAL AUDITOR GENERAL

This office, which will cost money to the taxpayers (at least $300,000) is wrapped in mystery. The scope and purpose of its mandate is not defined. It affects local governments but local governments (hence the taxpayers) did not know this was happening until some of the business people, which were given ample opportunity to comment, advised their elected officials that this was going on.

Even then, the province did not do anything to solicit local government feedback until the Union of BC Municipalities (UBCM) was advised that this was happening and a meeting occurred. Now the province is requesting that local governments provide comments back to the Ministry of Community Development by September 9 in writing and on a survey set by the Ministry. In other words, folks, this is a done deal.

It will make a few business people happy (not all of them, like not all of them liked the HST) but it will make more taxpayers angry. No due process was followed. In fact it was very slanted and one-sided. This new office will create new bureaucracy and new costs that we will have to pay. I am not sure who wins at the end of the day.

Not the taxpayers.

 

 

 

 

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About alby59

Alberto has a 25-year plus career in Local Government which began as City Manager in Italy. He currently serves as Chief Administrative Officer for the District of Lake Country in beautiful Central Okanagan BC. In addition, Alberto is Adjunct Professor to the Political Science Department of the University of Northern British Columbia and teaches a variety of local government related courses. He has developed a series of lectures on Leadership and Ethics and is designing a Project Management course aimed at Local Government and public sector practitioners. Very active in both his professional and academic life, Alberto has served as President of the Local Government Management Association of BC and the Association of Records Management Administrators of BC and Yukon. He also served as member of the Federation of Canadian Municipalities (FCM) Tsunami Recovery Committee for the reconstruction of communities and local governments in Sri Lanka and Indonesia hit by the 2004 Tsunami and managed an FCM capacity building program with the City of San Fernando, La Union in the Philippines while with the Township of Langley. Alberto has earned facilitator certifications with Franklin Covey and Cognitive Edge, and continues to foster his interest in personal education and professional development. He is an avid reader, music lover, and science fiction movie aficionado. He plays guitar and piano for fun and sings with his wife and his children. He is also very active in his church and community being a former Rotarian and currently serving as the Second Counselor in the Thompson Okanagan (Vernon Stake) Presidency of The Church of Jesus Christ of Latter-Day Saints. However, his most important interest is his family: his wife Silvana and their two children Victor and Grace.
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4 Responses to The Small Guys Always Pay More

  1. Alberto:

    Thank you for this – I agree 110% with you on this…

    Steve

  2. Richard Vollo says:

    Agree completely Alberto….many thanks

  3. Cesare says:

    Very interesting Alberto, well explained, I agree.

  4. Diane Wilde says:

    Very informative – thank you for this. I agree as well.

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