December 5, 2008

City Stacks up Poorly on Tax Front

City residents pay higher taxes than most Ontarians, but City Hall spends less on recreation, culture and services than their municipal partners.

The Frontier Centre for Public Policy released its annual report card for Canadian cities, ranking the relative financial position of 79 municipalities across the country.

The think tank released numbers ranking each municipality's financial position, revenue and expenditures, comparing statistics with the provincial average.

NEUTRAL STANCE

David Seymour, who co-authored the study, said the Frontier Centre is not making positive or negative statements in any category.

"People can ask, voters can ask, with Ottawa's taxation at 65% above the Ontario average, 'Are we okay with that?' " said Seymour.

"I know that Ottawa in many respects is a very special city and maybe the quality of life that those taxes pay for is something people are happy with, but perhaps they're not.

"But by putting that information out there, people can ask that question."

4 TIMES HIGHER

Seymour pointed to total revenue, government grants and user charges as being "all very high compared to the Ontario average."

"Overall, it's quite a high spending municipality and it seems to have a problem with interest expense," said Seymour.

The city's interest expense came in at four times the provincial average, and one of the highest rankings in the country.

Ottawa's financial assets, at $4,689 per household in 2007, is on par with the provincial average, while total liabilities, at $5,768 per household, is almost 70% higher than in other Ontario municipalities.

According to the report, the average Canadian municipality held $4,930 in financial assets and $3,677 in liabilities per household -- the $1,353 surplus assets per household an indication that "most municipalities are in good financial health."

Seymour said the report is useful because municipal politics is "fragmented" across 2,000 Canadian municipalities, "and we don't have these types of discussions."

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Related Items:

The 2008 Local Government Performance Index

The 2007 Local Government Performance Index

More from the Local Goverment Frontiers Project

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The Frontier Centre for Public Policy

is an independent public policy think tank whose mission is "to broaden the debate on our future through public policy research and education and to explore positive changes within our public institutions that support economic growth and opportunity."