Tax Me Please

City sales tax

http://taxfoundation.org/article/sales-tax-rates-major-us-cities

http://www.cbc.ca/news/canada/toronto/1-sales-tax-could-net-1-3b-for-transit-says-city-1.1192528

Apparently BigSmoke just passed its budget for the year, 10.1 billion dollars.  Lots of money, but then it is as big as a small country with over two million people and a surrounding region of city that contains over five million people.  Ten billion does not seem that big.  

The difference is that a small country decides everything and a big city does not have that choice.  BigSmoke is a third tier government, meaning there are two levels of government above it.  Two levels of government mean two levels of taxation and two sources of drain to the people who live there above the city itself.  Theoretically the national government deals with the National and International concerns.  Trade, Defense, and stuff like that.  The provincial government deals with things that were not as important back when the country was built, like education and healthcare.  The city level of government deals with the basic necessities, like waste removal, water, road maintenance and stuff like that.  It is pretty funny that interest is inversely proportional to the value that the governments provide.  

The government that provides the most services to us is the local government, but it has the lowest yielding taxes.  The Federal government provides almost nothing of our day to day interactions, but gets the most from taxation.  The middle level government is part way in between, both with taxes and personal importance to the people.

The biggest problem with the model of government is that only the higher government levels can pass laws that affect the lower levels but not the opposite.  The upper level governments chose, in times of financial pressure to move its responsibilities to lower level governments, but not increase their revenue gathering capabilities.  Both levels of government have done this over the past couple of decades.  BigSmoke has another problem because it is a very big city, it attracts mo specialized government services, because of the large population.  Many of these services are now their responsibility.  Additionally big cities have other services that they need to take care of that smaller cities and towns do not have, Public Transportation.  When the public transportation networks were first set up, it was as a partnership between all governments, but now the BigSmoke transit system is almost exclusively their responsibility.  

Larger Governments are willing to spend money locally if the city can take over the maintenance of the projects, but if they did that they would go deeper in debt.  Debt at the local government is not something that can be passed to anyone else.  New projects are increasingly required as the infrastructure ages and needs replacing, but also as the city grows and technology changes.  That is the problem.  Local governments need a better way to get money.

The Americans use a similar method of taxation.  Both federal governments collect income tax and trade tariffs, the State and Provincial raise money through sales taxes, so does our federal government.  The local level raises money through property taxes, and in the States with sales tax.  The Canadian Sales tax used to be at seven percent, but was later dropped to five.    If the cities were allowed to levy a sales tax of up to two percent, this would alleviate a lot of financial pressure on local governments.  If BigSmoke got this they could increase revenues by about $2.5 Billion a year.  That could be used to repair a lot of bridges, increase subway lines and make everything more efficient.

Part of me thinks that this income has to be kept focused, or it will begin to be thought of as expected income and used to get more paid people doing services.  I think it should be used to increase and repair the infrastructure or else it goes away.  The tax needs to be earmarked for specific projects.  1/2% allocated to public housing repairs for a projected eighteen months, then it ends, 1.25% allocated for a dedicated express subway line East to West, North to South, three years, .25% for overpass repairs for six months.

Something for the cities is needed.  Something for the big and the small alike.