Legalize Municipal Sales Tax

Cities should have the option of a sales tax to help meet their needs and ease pressure on provincial budgets.

Canadian municipalities should be permitted to charge a sales tax.

The recent round of provincial budgets and the federal budget have proven that those levels of government have neither the resources nor the inclination to finance the big-ticket items cities need, such as transit and low-income housing. They are mired in their own deficits and their own priorities.

Cities have inadequate revenue sources to pay for expensive things and are overly reliant on property taxes to cover current spending. They need new ways to raise money. A city sales tax would be a big help.

Not every city would need or want to charge this tax, but the cities with the greatest need – typically big cities that require transit and housing – could pursue the option. For those cities with real infrastructure gaps, it could be a blessing. Municipal leaders would have to make a case to their citizens, risking electoral defeat if they failed to be persuasive or to provide the promised benefits.

All three levels of government would need to be on side. Permission to levy a sales tax would have to come from the provinces, preferably leaving the cities to set the rate. Permission to use the existing collection and distribution mechanisms would have to come from Ottawa

Granting such permissions would be wise, for it would reduce pressure on provincial budgets and enable cities to prosper to the ultimate benefit of the provinces and the country.