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Why won’t the Province pay up?

By: Maggie Burton | August 17, 2017

“As the capital city, St. John’s hosts a big proportion of our most important provincial facilities, but the province has chosen to pass the disproportionate tax burden of the associated services directly onto city taxpayers.”

We all know it’s hard to find the money to run a city, and it’s not getting any easier. Infrastructure needs, aging populations, and inflation all point to the need for new and creative revenue sources if we want our towns to be sustainable.

Currently, 76 percent of St. John’s revenues come from property taxes. It’s quite a burden for our city’s homeowners and businesses to have to shoulder, especially with a tax that’s notoriously regressive, untethered from ability to pay, and dependent on the whims of the fluctuating real-estate market and on the opaque methods of property assessors. We can all recall the 2016 budget when homeowners were hit with tax hikes, often seemingly arbitrary, all based on their pre-downturn property values from 2014. 

The province has taken tentative steps toward reforming the assessment process, which is certainly a positive move. But we need to have a broader conversation about the source of revenues and making sure that the fiscal relationship between the Newfoundland government and its municipalities is fair and sustainable.

One place to start would be to bring us in line with the rest of the country on grants in lieu of taxes on government buildings.

Ever wonder how much the Confederation Building pays in property taxes? How about the MCP building, or the Liquor Corporation building, or the entire MUN campus? If your guess was, “They don’t,” then you’re on the money.

Aside from water fees, every property owned by the provincial government is exempt from city taxes, despite contributing heavily to use of city services like roads, garbage collection, and public transit. As the capital city, St. John’s hosts a big proportion of our most important provincial facilities, but the province has chosen to pass the disproportionate tax burden of the associated services directly onto city taxpayers. 

It doesn’t have to be this way, as the rest of Canada knows. Typically, governments don’t pay taxes to lower levels of government, but every province and territory except for Newfoundland and PEI recognizes their responsibility by paying grants to the city for each building owned by the government and its crown corporations, usually equivalent to what the property tax would be. Nova Scotia, for example, paid out $48 million to its municipalities in grants-in-lieu in 2008. 

To its credit, the City of St. John’s is aware of this discrepancy, and has proposed, in a 2011 position paper, a grant-in-lieu program that would equal 80 percent of the property tax on provincial buildings.

A 2013 press release acknowledged that discussions on this topic had begun, but after four years and a change in provincial governing party, we’ve heard nothing else. What is the current status of talks with the province? How much progress has been made towards addressing these inequities? And when can we expect to see a real plan for reforming the municipal-provincial fiscal relationship to ensure the long-term health of our communities and their citizens?

As your St. John’s city councillor, I will call for a renewed push to see some action on these are urgent matters that aren’t going away, and fight for your right not to pay an unfair proportion of taxes.

Maggie Burton / St. John’s
(City of St. John’s Councillor at Large candidate)

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