Sir: Some candidates in the upcoming municipal election will tell you that they will keep taxes low to help out low-income families – unemployed or underemployed. This is a misguided policy. Here’s why:
Property tax restraint benefits the 85% of households that are not needy. The residential tax charges for 2014 will total nearly $87 million, so of a 1% tax cut, about $130,0 will reach those in need, and nearly $740,000 will go to those who don`t need it. The benefit of tax restraint (1% increase instead of 2%) pays off five times as much for the owner of a $500,000 property as it does for a $100,000 property. So whom are you trying to help?
Our unemployment rate is about 10%. It’s much higher among young people. Nobody knows what the underemployment rate is (people who were earning $25 per hour in manufacturing, who now earn $15 per hour in a call centre) but let’s guestimate it at another 10%. So tax restraint is aimed at helping about 20% of our working-age residents.
Many unemployed and underemployed aren’t property owners. They are renters, or (for youth) live with their parents, or are homeless. Property tax restraint doesn`t benefit them. So a reasonable assumption might be that property tax restraint benefits the 15% of households that need help.
The picture gets worse. Tax rates for all other types of property are based on residential rates, so that when residential rates are held down by 1%, so are commercial, industrial, and agricultural rates. The total tax levy for all property classes in 2014 is more than $137 million, so a 1% tax restraint would total in excess of $1.3 million. Of that, less than 10% ($130,000) of the tax restraint would reach those homeowners in need. Renters, boarders, live-at-home youth and the homeless would not be helped at all.
So Mr. and Ms. Municipal Councillor and Candidate for Council, if your true aim is to help those hurting in this difficult economy, please don’t try to do it with tax cuts that benefit 90% of taxpayers who don’t need the help and don’t reach many non-property-owners who do need the help.
So what’s the alternative? The 2014 tax increase approved was 1.61%. A further increase of 1% would have brought it to 2.61%, a not-unreasonable level equalled or exceeded by many other Ontario municipalities. That would have provided more than $1.3 million to direct to the benefit of Chatham-Kent citizens in need of help, 10 times the benefit they would get from a 1% tax reduction.
That could go into jobs programs, geared-to-income housing, food subsidies, low-cost transportation programs (e.g. enhanced transit services) – options limited only by your imagination.
John Sigurjonsson
Chatham
