City Council must also lobby the Federal Government for a commitment to one cent from GST to municipal governments as a reasonable approach to stable financing. Our Constitution was set up at a time when Canada was predominantly a rural country where fewer than one in 10 people lived in cities. The taxation system was set up to greatly favour the federal and provincial levels of government. Today 80 percent of Canadians live in urban areas. Taxes are collected disproportionately at the wrong level, and the municipal level of government which runs our buses, provides our water, and should be collecting our recycling is left with less than its fair share of Canadian tax revenue to provide these services with.
Urban Canadians want our garbage collected, good transit service, safe roads, and dependable water supplies. We also want new investment in green urban infrastructure including recycling, mass transit, energy efficiency upgrades to buildings, water conservation and community amenities like parks, sports fields and arts, culture and community centres. Underlying this is an urgent need to replace aging sewer systems, roadways and water pipes.
All of these are municipal responsibilities, but Canadian municipalities are constantly struggling with how to find enough money to do it all. According to the Federation of Canadian Municipalities, 50 percent of Canadian tax revenue is spent on federal programs, 42 percent goes to the provinces and only 8 percent goes to municipal governments. Canada’s biggest fiscal imbalance is the imbalance between municipal governments and everyone else. City Council must lobby the Federal Government for a commitment to allocate one cent from GST on an approximate per capita basis to municipal governments.