Thursday, September 29, 2011

Is Calgary's Proposed "Penny Tax" A Pound Foolish?

  There has been a heated debate in Calgary this week over a group of local business leaders recommendation to add a 1% "Penny Tax" to the GST.  These business leaders ( a group called Transformation Calgary) models this proposal on a similar scheme used in Oklahoma City and suggest that the $350 million raised by this tax every year could be put towards a set of specific projects and be in force for a specific period of time. 

  While I understand that the City of Calgary only has a finite amount of resources to pay for services and local projects, I am always concerned when "new" taxes are proposed.  This "penny tax" sounds like an insignificant amount, but it will likely cost the average Calgarian hundreds of dollars a year in additional taxes.

 I also question how the city will be able to fairly designate this tax money to specific projects?  While I personally support addressing the lack of recreation facilities in Calgary, I am not as sold on building extravagant art facilities that will not be used by the majority of Calgarians.  How will the city determine what projects get on this list and how do you appease everyones interests?  Simply, I think this is an impossible task and will just create a new set of headaches and bellyaching, no matter what projects are included.

  Personally, I believe that the City has a hard time managing the budget that they have now and I am a little hard pressed to accept sending more taxes to city hall.  I think that if this proposal where to be accepted by Calgarians by a plebiscite vote in 2013, they city will become accustomed to receiving these tax dollars and this cycle will continue on forever.  ( We should note that the 1917 Income Tax act was implemented as a "short term measure" to help fund the war effort.....)  Looking at the Oklahoma City MAPS Tax, you will see that city council has come back to the citizens three times now to fund additional projects.  It just shows that once you implement a tax, it is almost impossible for the government receiving it to let go of that revenue, even if this "penny tax" is only intended for a specific period of time.

I had the chance to be a guest on the CBC Calgary Eyeopener's "Unconventional Panel" this week to talk about this tax.  Here is a link to that show if you are interested.

While I am intrigued by the idea in principal, there are too many unanswered questions at this time.  Perhaps we need to look at a voluntary lottery or consider specific user fees that can raise the funds required for these projects, as the money will be directy raised by those who support the cause.   I think we should look at the spending of our city administration before we request more tax dollars from hard working Calgarians..

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