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Push Back Against B.C.'s MSP-Like Infrastructure Levies

02/04/2016 02:36 EST | Updated 02/04/2017 05:12 EST
MCCAIG via Getty Images
A road sign that says 'Big Tax Hike.'
Sound the alarm: the provincial government's MSP-itis is spreading.

For years, the B.C. government has separated the Medical Services Plan (MSP) tax from income taxes as a way to make income taxes appear lower. It's a hat trick for government: they still get their money, they get to claim they have the lowest income tax rates in Canada and they get to brag at election time that they didn't raise your income taxes.

Now it appears cities are catching the bug.

Around British Columbia, municipal councils are introducing or hiking infrastructure levies, carving them out from the overall property tax rate. This lets them give taxpayers the impression that they are dutifully holding the line on property tax increases, while still taking more money from homeowners.

Surrey has a very bad case of MSP-itis. In 2007, the city introduced a "temporary" five-year road levy in order to fund traffic calming -- then kept it and hiked it. Surrey also added a surprise $100-per-property "recreation and culture levy" days after the 2014 election -- and increased it this year by 10 per cent. Yet the mayor still brags that they have one of the lowest property tax rates in the region.

Lake Country politicians pat themselves on the back for freezing property tax rates this year, but also brought in a $125-per-property "transportation for tomorrow" transit tax. That's MSP-itis in its purest form.

The disease is spreading. Cranbrook brought in a new "dedicated road tax" this year. West Vancouver is contemplating an "asset levy," a separate taxation scheme to fund infrastructure replacement.

Road levy. Recreation and culture levy. Transportation for tomorrow tax. Dedicated road tax. Asset levy. By any other name, MSP-itis smells just as bleak.

Make no mistake: we want our cities to invest in infrastructure. Sewer, water, roads; these are core responsibilities of local government and should be given priority.

But repackaging this spending with a new tax is a slap in the face, especially given the steady, never ending march of property tax hikes. Where has all the money gone that we already send city hall? Why haven't those continual tax increases been invested in infrastructure?

The truth your mayor doesn't want you to know is that most councils have blown all that extra money on wages and benefits -- not on repairing or building infrastructure.

In Surrey, for example, tax revenue grew $66.5 million from 2010 to 2014. But salaries, contracted services and the RCMP contract grew $68.9 million. Those new tax dollars, whether from new properties or hiked rates, didn't go to infrastructure.

Lake Country brought in $1.85 million more in taxes in 2014 than 2010, but spent $2.85 million more in salaries and contracted services. Again, that's money that didn't go to infrastructure.

Sadly, while the provincial government's MSP-itis has spread like wildfire, its commitment to holding staff salaries in check has been completely ignored by municipalities. A 2014 Ernst & Young study found that city hall wages had grown twice as fast as provincial government wages over the past decade.

No wonder cities are pushing to carve out "dedicated" MSP-like taxes for infrastructure. After all, who could oppose better roads or renewing sewer systems?

Taxpayers need to vaccinate their municipal councils against MSP-itis, and the only way to do that is to make themselves heard. If your community is looking to bring in a new infrastructure levy, push back. Demand that costs savings be found within city hall, and that money be reprioritized to these bread and butter issues. Ask why recent property tax hikes haven't been sufficient to cover these vital investments. Ask how much of new property tax revenue has gone to staffing in recent years.

Only together can we stop MSP-itis.

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