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Innovative property taxes in Winnipeg?

Being from Winnipeg, my West Coast colleagues quite often make comments like, "oh, you must really like it out here on the coast and in the mountains." And I usually agree with their remarks. And then feeling a bit defeated I generally follow up with quick facts about how Winnipeg was once the home of Neil Young, Louis Riel, Winnie the Pooh and the late Winnipeg Jets.

But they are right; Winnipeg is flat and cool – but for some reasons beyond all recognition, quite a creative community. Perhaps it is the cold winters keeping people inside that force residents to find joy in creative and cultural activities. Whatever it is, something created last winter is stirring up community dialogue like never before. In fact, many of the city councils and provincial governments across the country are watching Winnipeg and Manitoba with keen interest.

The Winnipeg council has created a draft tax plan to cut property taxes by as much as half and eliminate all business tax. Imagine, in Whistler, reducing your property tax by half! What they are planning to do in Winnipeg is to actually increase services, while shifting taxes from property and businesses to user pay systems. The idea was to create a vision of the community they wanted (similar to the CSP) and then shift the tax structure to help drive the community in this direction. They have introduced ideas like hotel taxes, not unfamiliar to Whistler, but they have also suggested taxes for excess garbage, water use, sewage, electricity, natural gas, auto fuel, and parking, among others.

At the same time they have reduced property tax, business tax and public transportation charges. Of course with any tax shift there are winners and some losers. However, the public consultation process in Winnipeg has created a list of possible ways to minimize the losers while preserving the revenue.

The tax shift is designed as user-pay, but also to include the "externalities" or the broad social costs (i.e. air pollution from cars, waste to the landfill) due to certain consumer preferences that currently go unaccounted for. In return, the property taxes are cut in half and business taxes eliminated. As opposed to taxes being based on the will of the assessment market, residents can now actually have some degree of control over them.

Unfortunately, Winnipeg can’t claim all the credit for the ideas, as many of were imported from EU countries, who borrowed the concept from a British economist named Pigou (1877-1959). Winnipeg can, however, claim credit for being the first municipality in Canada to draft such a creative fiscal scheme in partnership with the Manitoba government. A Web sites for more details on The Winnipeg Initiative is: http://www.winnipeg.ca/interhom/mayors_office/NewDeal/TheNewDeal.stm

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