Halifax
council was scheduled Tuesday to discuss “tax reform,” which is the
attempt on some councillors’ part to switch from the time-honoured
system of assessment-based property taxes to a “service-based” system
that would charge residents receiving similar city services the same
fee, regardless of the value of the property being serviced.
Specifically, the Tax Reform Committee is asking for a confidence
vote to continue its work. But because councillor Steve Streatch was at
a conference on cranberries (really!), the discussion was rescheduled
until September, by which time the committee’s full report should be
completed anyway.
Asking for confidence votes before there’s actually something to
vote on is typical shell-game politics at council: “Oh, we just want
your support in concept; you can vote against this when the
details come forward,” they say at the time of the confidence vote. But
then when the details come forward, it’s “We’ve put so much work into
this, and council has already voted in support of it, so you can’t vote
against it now.”
The committee’s work is similarly an attempt to dishonestly pull the
wool over citizens’ eyes or, more charitably, is an honest reflection
of shoddy thinking by the committee. That, anyway, is the consensus
view of three economists who have reviewed the committee’s work to
date.
“Don’t call it ‘disturbing’; call it ‘stupid,’ because that’s what
it is,” Lars Osberg tells me when I use the former term. Osberg has
been in the economics department at Dalhousie for 31 years, and is
co-author of a textbook with none other than Ben Bernake, chair of the
US Federal Reserve bank.
“In the short run, [service-based taxation] is bad for poor people,”
says Osberg—because it will shift the tax burden off high-end
properties and onto lower valued houses. “In the long run, it’s bad for
rich people too, because suddenly there’s downward pressure on the
quality of public services. Everyone ends up worse for it.”
Osberg says with a service-based taxation system, the public will
demand a level of services only to the level affordable by the median
wealth of the public—“it’s a great way to mobilize taxpayers to
demand fewer services,” he says. “And that’s not what you want to do
when you’re trying to get businesses and people to move to town.”
Mike Bradfield, a retired Dal econ prof who spent his 40-year career
studying regional development issues, agrees with Osberg’s critique,
and rips to shreds the committee’s numbers. In particular, says
Bradfield, the committee has a moving definition of “equity,” and one
that has no reflection in the data supposedly collected.
He also faults the much ballyhooed “fact” that there’s only a 37
percent correlation between property values and income.
“I think it’s garbage—that’s a technical term in economics,”
Bradfield says. “Not to present, in an appendix at least, the actual
data source they use, the actual equation they use to estimate the
statistical measure is slacking—I can’t think of a better term at the
time—because one would want to know what variables they put in to
make that test, and what they’re allowing for.”
Bradfield says the committee confuses “income” and “wealth,” perhaps
with the intention of purposely deceiving the public. For most people,
their largest single asset is their home, which is leveraged to put
children through school, to plan for retirement, to start businesses.
He cites his own situation—retired on a pension, therefore with
little income, but quite comfortable, in part because he owns a nice
house that’s paid for.
“So you’ve got to know, when they did their regression estimation,
did they have a variable in there for age?” he asks. “Simply to quote
37 percent is a non-starter.”
“Their ‘statistical analysis’ is a joke,” concurs Mathieu Dufour, a
Dalhousie economist who studies international finance and
development.
“What they report is meaningless, and even then the stats they
choose to use are dubious,” Dufour says of the committee’s work. “I’ve
taught econometrics and I am not sure I would have accepted such an
analysis.”
Dufour sends me a detailed commentary on the committee’s report (see
thecoast.ca/bites) and ends by
echoing the other economists: “Let’s just say that I am neither
impressed by the content of the proposal nor its form.”
Related Stories
Tax reform news
Tax reform — the economists speak
Halifax’s “tax reform” favours wealthy with higher value homes
This article appears in Aug 13-19, 2009.
Mike Bradfield, ‘ retired on a pension, therefore with little income ‘ !!!!!
A retired Dalhousie professor and must be on a pension of at least $70,000 a year.
That is a new definition of ‘ little income’.
Putting that distraction aside I have always thought this ‘tax reform’ was a load of BS; and you don’t need to be an economics prof to figure that out.
HRM has a spending problem and a hiring problem. I bet the ‘savings’ much mooted by Bill Hayward when forcing through amalgamation have all been gobbled up by the increas in the number of HRM employees.
Time for a review of amalgamation – I’d really like to know what a great deal it has been for me and all the others in HRM.
Stupid Mike Harris forced through the ‘new’ Toronto and look what a great deal that has been – for CUPE ($26 an hour plus benefits for picking up garbage)
I normally enjoy Tim Bousquet and expect to agree with him, so I was curious about the series of attacks on the proposed tax reforms. Like many HRM citizens I struggle with my taxes and, given the endless disasters such as the sewage plant failure, have little faith in the system.
After car costs, my property tax is my biggest annual expense. I have no sidewalk, sewer, mains water, available transit or a fire hydrant and I even make my own electricity and my kids are well past school age so I derive little benefit as it stands.
Having just worked my way through the committee’s efforts and recommendations I cannot support either Tim’s or his much quoted retirees’ opinions. The 14 page section from from Osberg is, frankly, simply out of date and lacking any real relevence. The other two profs demonstrate why tenure is of such dubious value as they try and deflect the discussion from the key issues into petty statistics.
In simple fact, we must start accepting responsibility for our actions and living within our means and this should be the most basic tenant of our tax structure. If we use it we should pay for it and forget all the mumbo jumbo with regressive/progressive taxation. Trying to hide the mismanagement behind the attack on those who have more expensive properties does not achieve anything. The provision of public services to people of low income must be separated from ownership of property and the proposal makes a good start on this.
Every item on the tax bill must be open to public discussion. No secrets, no hidden budgets and actual culpable responsibilty for expenditures must be accepted by the council members. If this means that we drop some services through common agreement then that is a real solution. If communitees wish to fund a sports center then that is their business, it should not be a burden on non users. Developers should shoulder the true cost of their developments instead of HRM trying to recover costs through property value based assessments.If people want to let of fireworks, be my guest but not using my taxes.
Come on Tim, stop talking to the dinosaurs at Dal and start really looking at the issue.
This piece would have been credible…. if it wasn’t explicitly (and admittedly) biased and one-sided.
How about asking some of the folks who actually worked on tax reform for the last few years to respond to the questions raised by your academics, then publishing both sides of the argument?
Oh, right, presenting a balanced view isn’t a requirement for opinion pieces.
I was going to take a run at Tim’s use of Osberg and Bradfield but others have done it far better than I could. Bradfield was a loon when I took his course 30+ years ago and he has gotten worse with age.
So .. Lets be clear with one another ..
We don’t fund public transit for low income neighbourhoods so that they too can join the thousands tearing up the pavement into town – who will then be fruitlessly looking for parking until they discover you can park all over south-end .. for free .. all day long.
We lower the taxes on houses that generate less service demand so that poor people can live within their means and not prop up the housing market – so we can all lower the selling price of our houses because an apartment in Dartmouth is the better bet.
We then reduce the taxes on any home over $300,000 by hiring and maintaining a full time replica City staffed Tax Dept. independent of the national and provincial standards – which is covered by raising the taxes on any home under $300,000 to reflect the demands of the obviously more service heavy, lower income housing.
We then stop funding city schools to create a greater population of lower income residents to fill up the slums to cover the suburban tax reduction and to reduce competition for those snappy new tax office jobs. Scratch that – they can’t afford the taxes on houses they could afford and remain in apartments.
Finally – any public funded facility in your neighbourhood is paid for completely on a the backs of the neighbourhood, regardless of who might use if from anywhere else in HRM.
Looking forward to the tattoo on my forearm to prove where I live BTW.
I must say that I have some real doubts about the first four – but cannot help but wonder who exactly plans to pick up for that 150 kilometres of fresh blacktop all the way through Musquodoboit valley from Dean to the Airport, the operating costs of Commons, the waterfront, Point Pleasant Park – and all the road work, plowing and salting costs picked up for people commuting into Halifax/Dartmouth daily.
I swear, we really are the slack jawed alcoholic nutjobs the City Staff take us for sometimes.
What about a land area tax? Its easy to find out the total land area in HRM. Divide total revenues required by a unit of land measurement, let’s say for the Imperial system’s sake an acre, and make every landowner pay the same dollar amount per area. That way older people who have been living in one spot their entire life don’t have to take the brunt of property taxes simply because their assesed value has gone up, and yet it still keeps the brunt of the tax burden off of the poor, who really don’t need it.
“So .. Lets be clear with one another ..” – you couldn’t be less clear.
Let’s be honest in your arguements or at least research for accuracy before posting.
1) Regarding “plowing and salting costs picked up for people commuting into Halifax/Dartmouth daily” the series 100 highways as well as “A series of Provincial trunk highways also serves HRM, and generally parallel or extend the 100- series highways. These include Highway 1 (Bedford Highway) to Mt. Uniacke and the Annapolis Valley, Highway 2 (Rocky Lake Dr.) to Truro, Highway 3 (St. Margaret’s Bay Road) along the South Shore and Highway 7 (Main St. in Dartmouth) to the Eastern Shore. Within the urban/suburban areas, several streets are designated as arterials, including Quinpool Rd., Portland Street, and Cole Harbour Rd.” (source HRM website)
These are maintained by the provincial government which taxes based on income – not the potential value of your property should you wish or have to sell it. Strike 1
2) Your “150 kilometres of fresh blacktop all the way through Musquodoboit valley from Dean to the Airport” – that is Highways 212, 224, 336 and 357 – are all provincial roads. Not only was the fresh blacktop paid for by the province they are also responsible plowing and salting of this road. Yes that’s right all provincial taxpayers are paying for this road not municipal taxes. Strike 2.
3) “The Waterfront” as well as some waterfront property in Dartmouth and Bedford is overseen and maintained by the “Waterfront Development Corporation” – a provincial Crown Corporation. Again HRM taxpayers are not paying for its maintenance. Strike 3
If this isn’t enough.
4) You also mention the operating costs of “the commons” and Point Pleasant Park. You don’t ask who picks up the cost for the construction and maintenance of the new community centres in Prospect and Fall River, the Mainland Commons, the new arena on Hammond’s Plains Rd. or the Lake Banook improvements. You also don’t mention the Dartmouth Commons or the Sackville Sports Stadium or the multitude of other facilities throughout HRM???
As per your tattoo idea – I live south of Quinpool but I hope HRM will make an exception when the Halifax Commons are shut down for the “good of all HRM” – I don’t recall any other sports facility in HRM being shut down for weeks for a commercial event.
5) With respect to public school funding, this is in the provincial jurisdiction. If you had taken the time to actually read the report you would have seen that “Area rates for Provincial services such as mandatory education would not change.” Make no mistake that the provincial government will ensure that it gets the funds it needs.
Tim Bosquet chose to cite 3 economists with a social bent to back up his article. More power to him. “Sucker” – please do some research before posting such nonsense claiming to clarify things. All of this info is available on the internet.
I’m no fan of HRM bureaucrats but I have to question who the “slack jawed alcoholic nutjob” is.